Public Infrastructure Ministry’s tender notice for Demerara bridge is intolerably ambiguous
Dear Editor,
The headline story of SN on September 28, 2017 that ‘Restricted bidding for the new Demerara River bridge raises red flags’ provides the opportunity to revisit the earlier prequalification tender notice by the Ministry of Public Infrastructure (MPI) for the “finance, design, build and [maintenance]” of the bridge. That tender invitation, based on its text and subsequent events, is intolerably ambiguous. In addition the ‘restricted bidding’ in your article is worthy of comment.
As a side note: this writer wrote Stabroek News about a year ago stating that legislation was needed to regulate the private funding of public projects (‘Legislation is needed for public-private partnerships’, Oct 1, 2016 ). In my view that legislation is still needed now and urgently so, as the Procurement Act, at least as presently existing, cannot properly encompass the regulation of private funding, or any other type of funding, for public projects where costs are recovered from user-citizens directly.
To return to the tender invitation: this is careful to state that it is envisaged that the bridge will be completed by 2020. This is an admission, perhaps unintended, that the new bridge will be part of the election campaign by the current government. Relevant here is the recent article under ‘Ian on Sunday’: ‘Thinking, already, about the next general election’ (SN Sept 3, 2017) in which the writer highlights “people worrying” about the next general election in Guyana, and reasons that this is terrible for the nation. On the other hand, though clear on completion time, the tender invitation exhibits ambiguity on whether the bridge will be built by government loan, or private capital via investors and bankers.
The invitation requests contractors to offer lump sum bids for design and construction of the bridge. The “complete basic design” will be provided by MPI as a reference. Conflictingly contractors are also requested, “in order to improve the funding package…” to “…advance proposals for financing the project”, all confirmed by later statements of MPI. No reference is made as to the availability of a prospectus or similar document, needed by a financier in these circumstances. Even if a prospectus is available, these two requests are incompatible with each other. The first is for the design and construction of the bridge, evidently to be funded by government loan. The bid can be based, correctly so, on the physical characteristics and environment of the location (“complete basic design”) and a bid can be accepted following a lump sum offer. However the second request (to “advance proposals for financing”) requires private investors to be attracted to the construction if they perceive the bridge to be viable in giving a surplus on investment. Diverse interests need to be met: that of the government in gaining a quality bridge; the investor in obtaining an adequate financial return; and the investor’s bank in gaining worthwhile loan interest and charges. In this case it is highly unlikely that a bid can be accepted after offer of a lump sum, since other essential criteria including ‘value for money’ and ‘affordability’ should need to be established and agreed, usually by negotiation, and the outcome is dependent on just how risks are allocated between the government and the private investor (with the investor’s bank taking all possible steps to avoid risks).
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