Gov’t gifted land to China Railway as part of Amaila deal – NICIL

Government holding company, the National Indus-trial and Commercial Investments Limited (NICIL) has confirmed that land has been gifted to China Railway First Group (Guyana) Inc (CRFG) at Liliendaal, as part of a deal for a fixed contract price for the Amaila Falls Hydropower Station and construction of a crucial section of the access road.

Winston Brassington
Winston Brassington

In a statement released yesterday, NICIL disclosed the transfer, “by way of Deed of Gift, from government of two lots of land, one acre at Liliendaal (completed) and 7.5 acres at Friendship (in the process of being transferred).

The CRFG would use the land at Liliendaal for building their Head Office and the land at Friendship for a materials marshaling yard.”

NICIL revealed that this was among the terms, approved by Cabinet, for CRFG’s construction of a difficult section of the Amaila Falls access road and the extension of its Engineering, Procurement and Construction (EPC) Contract Price Validity. This land deal had not been disclosed by NICIL prior to yesterday.

Completion of the road was at the time “a critical component” in meeting deadlines for the project, according to NICIL, which noted that CRFG in addition to being the contractor for the hydropower station was also a much more experienced contractor than local firms, which were unlikely to get the work done in time.

In addition to the land, NICIL said that as part of the negotiations between CRFG and NICIL, a reduction of the amount of its original bid of US$11.2M for the construction of the road to a cash contract price of US$8.5M was negotiated, representing a 25% reduction.

It said too that the EPC was subsequently extended and ongoing negotiation has resulted in an extension up to October 2014. According to the statement, “the price on the contract with CRFG executed in September 2012 expired in June of 2013; in early 2013, given the expected delay of postponing Financial Close until the latter part of 2013, it is necessary to have the EPC price extended.”

A fixed price contract in preference to a measured works contract was also agreed by the two parties.

In the March 22 Official Gazette, the CRFG was removed from the register for failing to comply with requirements, however in the April 26 Official Gazette it appeared that NICIL moved ahead with the transfer of lands in Turkeyen to CRFG. Speaking to Stabroek News yesterday, NICIL head Winston Brassington stated that the company is currently in good standing and that a verification process was done prior to the land transfer.

NICIL’s statement comes over a month after the land transfer was first raised by leader of the Alliance for Change Khemraj Ramjattan at a press briefing in May. Ramjattan has requested that the government explain the land transfer and why there was no price attached.

NICIL’s statement confirms that the land was gifted to CRFG with an additional incentive being the reduction in the contract price for the construction of Section 7 of the access road.

With the state’s $16B in equity in the project being cut from this year’s budget, NICIL may be asked to explain why the land was still transferred to CRFG. Moreover the land gifted was transferred in September; Sithe Global confirmed it would be pulling out of the project in August.

There has been no official statement issued by Sithe Global to suggest that there has been any recent developments and any decision to recommit to the project although NICIL said Finance Minister Dr Ashni Singh had indicated earlier this year that the key principals remained engaged in the project.

Sithe Global’s President Brian Kubeck had said that the project was too large to continue without national consensus.

Kubeck had issued explicit statements that unless all three parties in Parliament backed two measures in Parliament   for the controversial US$858M project, his company, which had been the prospective developer for a number of years, would pull out.

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