Specialty Hospital project in limbo

-World Bank bars Fedders Lloyd over procurement

The troubled Specialty Hospital project is now on hold as government’s handpicked contractor, Fedders Lloyd has been barred by India from participating in such contracts until 2020.

“Among other things, Fedders Lloyd Corporation Limited was not eligible to continue the project because it was debarred or disbarred by the World Bank from projects until 2020 due to its procurement policy,” Minister of State Joseph Harmon yesterday announced, at a post-Cabinet briefing, held at the Ministry of the Presidency.

Harmon told reporters that it was through correspondence from the Indian High Commission that government was advised that Fedders Lloyd had been barred until 2020 because of procurement violations. It was Minister of Finance Winston Jordan, who at Tuesday’s meeting of Cabinet informed of the letter from India when giving an overall update on the project.

Last November, Government and Fedders Lloyd signed a controversial Memorandum of Understanding (MoU) that would have seen work resuming on the construction of the hospital, at Turkeyen, East Coast Demerara, using the remainder of a US$18 million line of credit that had been granted by the Government of India  for the project. The remaining sum is approximately US$13.7 million.

The original contractor, Surendra Engineering Company Limited, which was selected in August 2012 amid controversy, was dismissed from the project by the former PPP/C administration on a variety of grounds, including producing false documents.

At the time Surendra was canned it said that it had used up approximately US$4.3M of the overall allocation. It was later sued by the Guyana Govern-ment for $965m.

It was Fedders Lloyd which had protested the 2012 selection saying that Surendra was selected based on favouritism and not on work experience and merit. The latest development will be seen as a major embarrassment for the APNU+AFC government and particularly the Ministry of Finance which had doggedly stood by the decision to select Fedders Lloyd instead of proceeding to a new tender process

While there had been a  huge public outcry at the handpicking of Fedders Lloyd, government forged ahead with the deal and said that after legal paperwork was sorted, it was expected that works would resume at the beginning of July 2016.

Government defended their decision on the selection of Fedders Lloyd without going through public tendering in line with the Procurement Act, saying they were chosen because the firm was one of the two bidders that were in contention for the original project. However, the original evaluation report showed that the company had been disqualified from the process.

Former Auditor General Anand Goolsarran and Transparency Institute of Guyana Inc. (TIGI) later called for the Fedders Lloyd MoU to be cancelled and the bidding process restarted.

Objections had also been raised to Fedders Lloyd as it had had a relationship with current Vice President and Minister of Public Security, Khemraj Ramjattan.

But President David Granger was adamant that government would stick with its selection of Fedders Lloyd saying that he saw no “justification or need” to have the project retendered as his Minister of Finance had examined the issue and he stood by Jordan’s decision.

‘Inflation and interest rate inquiries’

The Minister of State noted yesterday that having the specialty hospital was not government’s first choice for the Indian financing. He reminded that upon assumption of  office the APNU+AFC coalition government stated its preference to use the funds available, which at the time amounted US$13.8M, on primary healthcare facilities and in the process identified three hospitals for the use of that money.

The hospitals named were the West Demerara Regional Hospital, Suddie and Bartica.  He said that the Indian government assured that they would fund the rehabilitation of the named three hospitals but that the specialty hospital project should be kept and executed for the remaining US$13.8M and only then did government grant its no-objection to Fedders Lloyd as the contractor.

The Indian government says now that Fedders Lloyd has been disallowed from executing works on the hospital it wants a fresh tendering process.

“In the said letter the Indian Government expressed its preference for a fresh tendering process to select an Indian contactor to execute the project. By this decision, the Specialty Hospital is again put on hold pending the completion of fresh tendering to select an Indian contracting firm that is preparing to complete the project for the balance remaining, that will be $13.8M,” Harmon disclosed.

But with inflation and interest, government is seeking to enquire what will be its financial obligations should it allow this process.

Harmon explained “The tendering process, as we are aware actually takes quite a while, several months it takes to be completed. And while this process is being completed the loan sum continues to be eroded by inflation, interest and fees,” he stated.

“As a result of this new development regarding the project, the ministers of Foreign Affairs, Finance and Public Health have been requested by Cabinet to make certain inquiries of the Indian government before Cabinet adopts a definitive course of action on this specialty hospital project,” he added.

 

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