HDC project halted
■ Anthony Wilson
PRIME Minister Dr Keith Rowley yesterday announced the cancellation of the contract to construct 5,000 apartment units at specific sites across Trinidad signed by the Housing Development Corporation (HDC) with the Chinese construction and engineering company China Gezhouba Group International Engineering Co Ltd (CGGC).
'That contract was reviewed extensively by the Cabinet and it has been stopped. HDC has been instructed to go back out to tender because there were some parts of that contract that did not meet Cabinet's acceptance and approval, both structurally and legally. That contract has been stopped,' Rowley told journalists at yesterday's post-Cabinet news conference.
Asked what he meant by stopped, the Prime Minister said: 'We are not going forward with it in the form that it was produced.'
Questioned if that meant the contract had been cancelled, Rowley responded: 'Cancelled yes.'
Under the first phase of the agreement, HDC agreed that CGGC would construct 439 two- and three-bedroom apartments at Lady Hailes Avenue in San Fernando and South Quay in Port of Spain for a contract amount of US$71.74 million (TT$485 million). The formal agreement to construct the 5,000 apartment units was signed at a ceremony at the Hyatt Regency (Trinidad) hotel on May 17, 2019.
The announcement of the cancellation of the largest state housing contract in T&T's history came eight days after Express Business published, in an exclusive story, key details of the benefits the Chinese contractor would have enjoyed under the agreement with the HDC.
Under the headline 'HDC's sweetheart deal with Chinese contractor', Express Business revealed:
• HDC agreed to use its best efforts to convert 60 per cent of the $485 million contract price to US dollars;
• HDC agreed to reimburse all of CGGC's VAT payables one month after each interim payment certificate. HDC agreed, in writing, to use its own funds to reimburse the Chinese contractor;
• HDC agreed to reimburse all of CGGC's corporate tax payments within a period of one month after the submission date;
• The contract also ensures that the Chinese contractor does not pay customs duty or import duties, and all other related fees or charges levied on the contractor during the performance of the project, in accordance with the laws of T&T. In the event that the exemption is not approved by any authorities, all above-noted taxes, duties, fees and charges shall be reimbursed by the HDC through its own fund resources;
• HDC was responsible for obtaining all permits, including tax exemption certificates, planning permission, work permits, permits to work and any other permits and approvals required for the project;
• While the Chinese contractor pledged to use as many local workers and materials as possible for the project, the contract makes provision for CGGC to be granted up to 600 work permits for Chinese labourers;
• HDC was responsible for obtaining all visas, resident permits and work permits;
• HDC also had the responsibility to provide 4.94 acres (two hectares) of land to serve as temporary housing for the up to 600 labourers;
• HDC, as well, was responsible for ensuring 24-hour security at the building sites for the contractor's personnel and property; 'During the execution of the project, at least one patrol car with two armed police shall be arranged for each site 24 hours per day by the local police station under the liaison of the employer,' the contract states;
• HDC agreed to deliver to the contractor a payment guarantee covering 100 per cent of the contract price within 28 days of the signing of the contract agreement; and
• HDC also agreed that any delays in payment would be subject to financing charges of four per cent above the discount rate of the Central Bank. The present discount rate is seven per cent, which means the financing charges for delayed payment compounded monthly at 11 per cent.
JCC praises Rowley
Responding to the news last night, Fazir Khan, president of the Joint Consultative Council for the Construction Industry (JCC), welcomed 'this decisive action taken by Prime Minister Keith Rowley to protect the public purse'.
The JCC said that it was 'alarming that such a flawed contract could have been prepared by the HDC in the first place and if it had been allowed to proceed, the people of T&T would have been severely disadvantaged'.
The construction industry group said the cancellation of the contract 'underscores the need for the immediate and full proclamation of the Procurement Regulations to give full effect to the Procurement Act'.
The JCC said: 'With a fully operationalised Office of Procurement Management, the Prime Minister and well-intentioned ministers would have the ably empowered institutional assistance to ensure proper, lawful procurement practices are carried out by various state agencies.'
Neither HDC chairman Newman George nor its managing director Brent Lyons immediately responded to telephone calls and messages from the Express yesterday.
An official at the Chinese embassy promised to call the Express back with a comment when the Prime Minister's comments were confirmed.
FLASHBACK: Executive vice-president of CGGC Energy China Zhou Xing, seated, second from left, and HDC chairman Newman George shake hands after signing documents for the housing construction project in May. Looking on, from left and seated, are CGGC president Liu Huailiang and HDC managing director Brent Lyons. Back row from left, Minister of Trade Paula Gopee-Scoon, Attorney General Faris Al-Rawi, China's ambassador to T&T Song Yumin, Minister of Housing Edmund Dillon, former minister Marlene McDonald and Minister of Foreign Affairs Dennis Moses.