The winning bidder to develop Ragged Island’s $2m solar microgrid, on the same day it signed the deal with BPL, assigned all project rights to an entity that failed to make the final tender round.
Consultants hired by the Prime Minister’s Office described this as “concerning” in a report that detailed numerous flaws in the tendering process for a renewable energy solution designed to aid the Hurricane Irma-stricken island’s revival.
FTI Consulting, in a document seen by Tribune Business, also said there was no evidence to show the winning bidder, Canadian-based Tugliq Energy Company, had obtained the $400,000 performance bond to guarantee its performance within the stipulated ten-day timeframe following the contract’s signing.
The same applied to Salt Energy, the company to which Tugliq assigned 100 percent of the project rights. And the report also criticised the composition of the committee formed to evaluate the bids, arguing that it was “inconsistent with best practice” and may have breached Bahamas Power & Light’s (BPL) own policies and procedural requirements.
“The contract for the Ragged Island solar microgrid project was awarded to Tugliq Energy Company, which had during the RFP (request for proposal) phase but not the RFQ (request for qualification) phase, disclosed its intention to sub-contract some portion of the contract to Salt Energy,” the FTI Consulting report said.
“Salt had submitted qualifications during the RFQ phase, but was not invited to participate in the next phase. Nonetheless, BPL awarded the tender to Tugliq knowing that Salt would play a role in the project.
“More concerning was the fact that on July 19, 2019, the same day Tugliq signed its contract with BPL, Tugliq assigned the entirety of the contract to Salt in a separate agreement,” the report added. “Thus, Salt assumed the entire Ragged Island solar microgrid project despite the fact that BPL did not invite it to participate in the second phase of the tender.
“This raises concerns that Tugliq and Salt may have co-ordinated their tender participation in a manner not fully disclosed to BPL.” Besides concerns over bid manipulation, the FTI Consulting report also detailed contrasting explanations from BPL chairman, Dr Donovan Moxey, and chief executive, Whitney Heastie, over the utility’s decision to consent to Salt taking over the project.
The assignment had already been agreed between Charles Meier, Salt’s president, and Nicolas Seguin, one of Tugliq’s three shareholders, when Mr Heastie signed the deal on BPL’s behalf as a sole signatory on July 23, 2019, some four days later.
“When asked about the assignment letter during the course of an interview, Heastie said that he was not in the approval chain but was aware of the assignment and recalled that it was presented to the Board, which approved it,” FTI Consulting’s report said.
“However, FTI found no references to the assignment in the Board meeting minutes. In addition, Moxey said he was not familiar with the contract assignment or the circumstances surrounding it.”
FTI Consulting added that the Tugliq/Salt contract was discussed at BPL’s July 26, 2019, Board meeting. Burlington Strachan, BPL’s head of grid solutions and a 40-year veteran with the utility, informed the Board that the contract had been awarded to Tugliq on an “engineering, procurement and construction (EPC)” basis despite Salt taking over all rights to the project one week before.
“Strachan also informed the Board that BPL had received $2.5m in government funding for the Ragged Island solar microgrid project,” the report added. With Bahamians facing a double exposure as BPL customers and taxpayers, FTI Consulting sought an explanation from Mr Strachan as to “the rationale for the assignment” to Salt.
“Strachan believed that Tugliq was primarily interested in the independent power producer (IPP) option, and did not have much interest in the EPC option,” the report detailed. “He described Tugliq as more of an IPP-focused company, with Salt being more of an EPC-focused company.
“Therefore, when Tugliq was selected as the winner of the EPC contract, it decided to forego the entirety of the contract in favour of Salt. It remains unclear why Tugliq would have submitted an EPC proposal in the first place if this option was not of interest to it.”
Bidders were allowed to submit different types of solutions for Ragged Island’s energy needs. The initial RFQ phase, designed to separate serious, qualified bids from the also-rans, saw Tugliq fare poorly on both the EOC and BOOTT (build, own, operate, transfer and train) submissions, finishing second-last in both categories.
“Tugliq Energy Company later won the RFP bid, despite not scoring well in the RFQ phase,” FTI Consulting noted. “It received 32 points for its BOOTT qualifications and 30.5 points for its EPC qualifications, just above the minimum qualifying score.”
Salt did not even make it to the RFP phase, with Tugliq’s partner in the the prior round identified as fellow Canadian renewable energy distributor, Rematek Energie. The latter, of course, would eventually be ditched.
Four final bids were eventually received in the RFP round. Tugliq submitted both EPC and IPP solutions, while ABB offered an EPC proposal and NantEnergy an IPP structure. However, FTI Consulting identified “discrepancies” between the criteria used to evaluate EPC and IPP bids, with the former requiring “fewer items” and less details.
Tugliq’s EPC proposal scored highest due to the experience of its then-proposed sub-contractors, SMA Sunbelt, Salt and Grand Bahama-based Waugh Construction. Both Salt and SMA Sunbelt had initially been standalone participants in the process, but ultimately threw in their lot with Tugliq.
“In further reviewing Tugliq’s bid documents, FTI observed that its technical proposal was prepared by SMA Sunbelt and provided to Tugliq on June 6, 2019, one day before the RFP deadline,” the report said. “An attached cover letter from SMA Sunbelt indicated that it was drafted in response to a request from Tugliq.”
FTI Consulting said there were also discrepancies between Tugliq’s offer and the bid requirements. Whereas the battery system was supposed to be located 1.6 miles from BPL’s existing Ragged Island site, the Tugliq proposal called for it to be placed at the latter location.
And, instead of a minimum energy storage capacity of 1,260 kilowatt hours (kWh), and minimum AC output of 300 kW (kilowatts), the Tugliq offer proposed a capacity of 1,200 kWh and output of 216 kW. Still, the final contract with BPL stipulated a $2.9326m “base price” with Tugliq to receive $1.609m, or 55 percent, of this sum as a mobilisation payment upon signing.
The bids were evaluated by Mr Strachan and three persons from the Rocky Mountain Institute, a non-profit that specialises in renewable energy. The FTI Consulting report said this may have violated BPL policies by not being sufficiently diverse and failing to include persons from “disinterested” departments, such as procurement or finance.
“A theme that emerged during the course of FTI’s review was a general failure by BPL to abide by policies and procedures,” the consultants concluded.
Rampant inefficiencies in the Water and Sewerage Authority (WASA) project management department have led to the beleaguered State-owned company over procuring $81 million in pipelines they may not have needed.
This was just one of the shocking findings contained in a 35-page report by WASA’s Internal Audit Compliance Department (IACD) into the authority’s procurement of 38,480 lengths of pipes valued at $223 million from Chinese based firm Xin Xing Ductile Pipes Company Ltd since 2013. The 38,480 pipes cover a distance of 235.14 kilometres and it marked the largest purchase in WASA’s history.
The pipes were bought for the execution of 28 projects geared towards improving WASA’s reliability and regularity of its pipe-borne supply to its 400,000-plus customers.
Eight years later, however, the report, dated September 16, 2021 and obtained by Guardian Media, has found that 16 of the 28 projects are still incomplete after millions of taxpayers’ dollars have been spent.
The report also uncovered discrepancies in the procurement process for the pipes, irregularities in the shortlisting and evaluation procedures and lack of due diligence by WASA’s management.
The audit concluded that every aspect of WASA’s project management cycle had been plagued with inefficiencies which resulted in the over procurement of pipes valued at $81,284,659.74
The fact that 16 projects had not been executed, the report stated, demonstrated the authority’s inability to execute projects within planned timeframes, while management did not have the autonomy and ability to determine the prioritisation of projects.
“The authority’s failure to adequately conceptualise projects resulted in pipes being procured for 10 projects that are no longer required. The IACD is of the opinion that the controls over the procurement of the iron pipes were unsatisfactory,” the report discovered.
Public Utilities Minister Marvin Gonzales ordered the IACD to commission the audit in March, in order to verify whether there was a legitimate need for the number of pipes procured, the reason for a large number of unused pipes in stock and ascertain if the procurement process was executed as an arm’s length transaction.
A review of the detailed report showed WASA purchased the pipes under the then People’s Partnership administration.
Funding for the projects was allocated under the 12-month Water Development Plan and Infrastructure Development and Consolidated Funds from the T&T government.
The pipes, ranging in diameters eight to 43 inches, were delivered to WASA in five tranches between March 2013 and May 2014 and the average cost per pipe was listed at $5,801.
Apart from the over procurement of the 16,045 pipes, the audit showed that two projects, namely Caroni Dualling from Couva to San Fernando and Naparima/Mayaro Road, were never executed but estimated to use 8,167 pipes valued at $61,067,787.56.
“It appears that the authority procured 873 pipes valued at $5,064,814.26 in excess of the quantities approved by the TC (Tenders Committee) at the 219th and 225th meetings. The TC approved the procurement of 37,607 pipes, yet 38,480 pipes were procured.”
The report stated that “the former Head, Water Projects explained that since Xin Xing’s cost was less than the authority’s estimate (38 per cent) spare pipes were also purchased for repairs and future projects. However, this was not adequately justified via votes to the TC.”
Also, 8,883 pipes priced at $26,045,566.41 were also procured for ten projects that were no longer required.
Of these projects, four were completed prior to receipt of Xin Xing’s pipes and should not have been included in the 28 projects.
Pipes were also purchased for six other projects, three of which had been duplicated, while an additional three were cancelled/discontinued. WASA spent $6,322,947.56 on 1,650 pipes for the three duplicated projects.
“This brings into question whether management was negligent or deliberately misled the TC when requesting approval for the quantities of pipes required,” the report stated.
The report cited two projects—Beetham/Sea Lots and Castara to Runnemede—that did not require pipes as confirmed by the former head of Water Projects, yet 1,250 pipes valued at $3,294,898.58 were procured for the projects.
“It should be noted that the former Head, Water Projects subsequently contradicted himself by indicating that the Beetham/Sea Lots project was executed at a reduced scope but no documentation was provided to substantiate this claim,” the report found.
The report discovered that one project —South Central Road—which had been discontinued was estimated to use 983 pipes, having an approximate value of $3,499,615,25.
Further analysis also showed that 12 completed projects used 1,878 pipes less than what was estimated.
Among the 12 projects is the Caroni Dualling South Transmission Main project, which is now 91 per cent completed after starting in 2017.
“Based on documentation received from the executing department, although an estimated $289,412,088.89 of taxpayers’ dollars has been spent to date, of which $89,307,528.52 is for iron pipes, there is no confirmed plan to complete this project.”
It also found that as of May 2021, WASA had not used 24,269 of the pipes valued at $80,113,234.68 which are currently stored in Freeport, Caroni, Carlsen Field and two areas in Tobago.
“IACD was unable to accurately reconcile and validate the actual quantities of pipes that were used in the 28 projects. Utilising the Executing Department’s records, 16,550 pipes were calculated to be on hand. The variance of 7,719 lengths valued $44,782,704.78 between Inventory (Oracle) and the Executing Department’s records, may have resulted from inadequate and inaccurate project records,” the report found.
The report attributed that other control deficiencies would have contributed to the variances.
In reviewing the procurement process, the IACD picked up several discrepancies which brought into question whether “the process was conducted at arm’s length.”
Based on their investigations, the audit found the Tenders Committee and the board did not exercise due diligence in requesting adequate support from management to make informed decisions.
Irregularities were also identified in the shortlisting and evaluation process.
“The deficiencies noted in the procurement process possibly impaired the transparency and equity of the tendering process, negatively impacted the quality of pipes procured and prevented the authority from attaining value for money for WTC 46/2012,” the audit report said.
The report concluded that the tendering process for the procurement of the iron pipes was deficient, since the selection team failed to use the prequalification criteria under WTC 137/2011. The management team at the time justified the circumvention of the same, as three packages of the WTC only had two compliant bidders, which is the minimum required to facilitate a competitive e-auction. However, the report pointed out, this did not justify circumvention.
“This not only impaired the transparency and equity of the procurement process but possibly limited the authority’s selection of the most suitable supplier.”
The audit also picked up several variances between the pipes that were purchased and WASA’s inventory records.
To address the deficiencies, the IACD put forward several recommendations. One recommendation was that acting CEO Sherland Sheppard consider utilising the pipes in stock for future projects and revise its evaluation process and records management in readiness for the implementation of the Public Procurement and Disposal of Public Property Act 2015.
“It should be noted that the detailed issues were raised with the relevant managers for corrective action and will not be included as part of the outstanding Audit Recommendations. However, it is expected that corrective action will be taken to implement recommendations in the shortest possible time frame.”
Contacted on the audit report, Minister Gonzales said for weeks he has been pondering how best he can utilise his time to address the ills that occurred in WASA over the years,“including the pipeline debacle and scandal.”
“I think the public interest, at this time, will be better served by putting all the unused pipeline to use to improve transmission and distribution of water, especially in areas where there are high leakage lines,” he said.
He said many of the players who were involved “in this scandal are no longer in the authority and the transformation will address the internal shortcomings that facilitated this egregious and vexing state of affairs.”
Having seen the pipes, which are hidden from the glare of the public, some rotting away, Gonzales said, “It struck me that past executives were never interested in solving the country’s water crisis but used WASA as a cash cow to line their pockets.”
Gonzales said this fiasco went on for years “undetected” with no answers in sight.
“I was not getting satisfactory explanations from previous management. Now that a special audit is completed the findings are clear and startling,” he said, adding he will ensure that every piece of unused pipeline is placed in the ground to improve T&T’s water supply for citizens.
Pressed on if he will refer the audit to the T&T Police Service for an investigation, Gonzales did not respond.
The government is moving ahead with a 21-lot subdivision in Spring City, Abaco, according to HousingMinister JoBeth Coleby-Davis.
At the first Office of the Prime Minster press briefing, Coleby-Davis said: “Our first priority was to look at how we can assist the persons in Abaco because we understand that they suffered a great loss two years ago and there is a need for us to do some work down there.
“In Abaco, we are ready to begin the tender process for the construction of the road for a 21-lot subdivision in Spring City. The tender document has been drafted and as soon as final approval is given we will move forward withgetting the bids for road works.”
The process is expected to take four to five weeks.
Work to restore Georgetown’s City Hall is scheduled to begin tomorrow and Trinidadian contractor Fides Ltd has said Guyanese will make up a large part of its labour force.
In response to questions posed by this newspaper, the company said with the exception of specialist restoration engineers, who possess the technical knowledge to execute the works, the support staff will be Guyanese.
“We envisage that the Guyanese workers will benefit from an exchange of knowledge and technology from our advanced restoration specialists. They can learn the skills and techniques, which they in turn can use in future restoration projects,” the company explained.
Fides said one of its objectives is to train Guyanese workers to work collaboratively with their restoration team. This, it said, will encourage entrepreneurship “in this unique niche in the construction sector.”
The firm’s sister office in Guyana won the $780 million contract to rehabilitate the dilapidated City Hall. According to its website, the company, which has over 12 years of experience in restoration of colonial architecture, boasts experience in restoring buildings to their architectural glory.
Touching on works to be done to the City Hall building, it said it will be using the “adaptive reuse” technique, which is the process of retrofitting old buildings for new uses. The technique, it was explained allows structures to retain their historic integrity while providing for occupants with modern facilities.
“We will begin with the preliminary stage of the project, which consists of mobilisation of the site office and equipment onto the site, placing hoarding around the perimeter of the compound, installation of safety signage and conducting a comprehensive technical assessment of the building,” the company explained.
In the second stage, Fides said it will commence a structural retrofit of the roof and structural columns and beams of building. This process entails replacing decayed timber elements with new timber to match what was originally designed. The engineers will then engage in selective demolition, where they will remove any old material, such as ceilings or wall partitions, which are no longer required.
The external façade will be repaired along the northern and western walls, the company further explained, while noting that there will be works on the roof and the tower of the build simultaneously.
On completion of the northern and western walls, restoration will commence on the southern and eastern façade.
“Additionally while work is occurring on the external part of the building, we will be installing the new ceilings, walls and floors and also installing electrical, plumbing and air conditioning elements inside the building,” the company said.
The final phase entails the external works and landscaping and the installation of decorative elements, such as cast iron railings and any existing medallions that the company would have restored or replicated.
An 18-month timeline has been established for the completion of the project.
The project team will be led by the company’s Structural Engineer Yeimer Suarez. According to Fides, he has worked on numerous Grade One restorations in Cuba and has been the head of all of its restoration projects in Trinidad, which include the restoration of Stollmeyer’s Castle.
“Fides has a full project team which is lending its support for this project. We will utilize our collective strength to bring City Hall back to its former glory,” the company added.
Last week, in an advertisement in Kaieteur News, Fides Guyana Inc announced a number of vacancies, including that of an art restoration specialist, and a civil engineer.
Prepared Additionally, the company said that it has prepared itself to address challenges should any arise. The work plan, it explained, was crafted out of les-sons learned from previous restoration projects. With this in place, they are hoping to eliminate and minimise any delays during the City Hall restoration.
(CNS): The utilities regulator has come up with a plan to enable potential energy producers to bid against each other to supply renewable energy through long-term contracts at the lowest possible price, officials have said. OfReg, which has been given responsibility for regulating the rollout of green energy, said it has been working on several initiatives to facilitate the addition of renewables into the local electricity market. Cayman’s national energy policy calls for 70% of local power to be generated from green sources in just 15 years but at present only around 2% comes from renewables, presenting a gargantuan challenge.
“Significant new investment in renewable technologies is still required in order to reach the 2037 target,” the regulator said in the documents outlining the auction idea. “The office has determined to implement a Renewable Energy Auction Scheme (REAS) as a means of promoting a viable long-term renewable energy market that is of a sufficient scale to interest market participants, and can be easily integrated into a competitive electricity generation market.”
OfReg said it has ruled out renewable technologies such as biogas, biomass and geothermal because there are not enough projects to hold successful competitive auctions and to achieve economies of scale in most areas in the Cayman Islands.
With just six responses from stakeholders, including CUC, to its first consultation and two cross-submissions during the public consultation, OfReg said that the auction concept is supported by those likely to bid.
The Renewable Energy Auction Scheme will be opened early in the first part of 2022 and managed by the regulator. It will take into account OfReg’s duty to promote appropriate, effective and fair competition, and to ensure that energy is provided at the least affordable cost to consumers, whilst simultaneously supporting environmental sustainability.
“The REAS sets out the mechanism for the procurement of utility-scale renewables through a transparent, competitive and robust process,” said OfReg CEO Malike Cummings. “The current Integrated Resource Plan projects 140 MW of utility-scale solar by the year 2030, and it is through the utilisation of tools such as the REAS we will be able to incentivise significant investments in renewable energy that will drive economic development and job creation in the Cayman Islands.”
The regulator said it is committed to a pipeline of auctions for solar and wind projects with defined capacity amounts. A minimum of 25MW of utility-scale solar renewable energy is available for allocation in 2021 with more megawatts going up for auction every couple of years in line with CUC’s advice regarding how much can be absorbed into the grid. The firm auction date together with the respective amounts to be auctioned will be announced at least sixty days before each auction.
