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Synergy Holdings fails to honour completion agreement – Government terminates contract PDF Print E-mail
Written by Wendella Davidson
Friday, 13 January 2012 02:05
SYNERGY HOLDINGS, which was contracted in March 2010 by Government to construct the access road to the Amaila Falls hydropower project has failed to honour one of the terms of a completion agreement reached with Government recently on the project, resulting in Government moving to terminate the construction contract with that company.
Late last year, government summoned the company’s principal, Fip Motilall, and expressed concerns about the pace at which his company was progressing with work on the construction contract. In order to ensure that the pace of work accelerated so that the project could be completed in a timely manner, Government executed an agreement for completion with Synergy, under which the company agreed to certain undertakings.
[The contractor, Fip Motilall] These undertakings included subcontracting certain sections of the road and providing a valid performance bond to Government to cover the period of the execution of the remaining works and the defects liability period, given that the originally provided performance bond would not cover the entire period of the revised schedule. Under the agreement, failure by the company to comply with these undertakings would result in the construction contract being terminated and certain other measures being instituted by Government.
The new performance bond was required to be supplied on or before 10 January 2012. The company having failed to comply with this condition of the agreement for completion, Government notified the company of the termination of the construction contract and is currently taking immediate steps to invoke the other remedies provided for under the construction contract and the completion agreement.
Government remains firmly committed to taking all other appropriate steps to ensure that the road project is completed in a timely manner in order to allow access for the substantive Amaila Falls Hydropower Project.
The government yesterday announced the termination of a US$15.4M contract agreement it has entered into with Synergy Holdings Inc. for the construction of the Amaila Falls Access Road and Transmission Line Clearing Project.
In announcing termination of the contract, Works Minister Robeson Benn said at an “urgent-called” press conference hosted in his Wight’s Lane, Kingston office, that “the decision is in accordance with Article 9 of the original contract, and is also consistent with the terms of the agreement for completion executed on Dec 21, 2011 between the Ministry of Public Works and Synergy Holding Inc.”
The agreement included, among other things, the contractor providing a valid performance bond to the government from an acceptable institution to the value of 10 per cent of the contract price on or before January 10, 2012, for the period of the execution of the remaining works, and for the ‘defects liability’ period.

Section 3 2:07 of the agreement states:
“Synergy Holdings Inc. (SHI) will complete all works including all road widening works, in Sections 2, 3, 4, 5, 6 and 7 on or before April 30, 2012. This deadline will only be extended for reasons of excessive rainfall as determined by the Client. Should the Contractor SHI fail to meet the deadline of April 30, 2012 or the extended deadline as determined by the Client, then the contact will be terminated with SHI giving up the right to legal redress. The Client will impose the following measures at termination of the contract due to failure to meet the deadline: Apply Liquidated damages at a rate of US10,000 per day from January 1st 2012 to the date of termination, to a maximum of US$1, 540,000; seize the Contractor’s Retention Sum; seize and take ownership of all pieces of equipment and all other property used by the contractor on the Amaila falls Access Road Project.”
Benn, who said the contract was behind schedule, noted: "As of December 2011, the contractor, Synergy Holdings Inc, had completed only 40 percent of the works, despite repeated urgings and interventions from the project engineer and the consulting firm to have the project completed." [Minister Robeson Benn]
And as a consequence of the termination of the contract, the Works Minister said the client (the Government) would be moving to apply for liquidated damages at the rate of US$10,000 per day from January 1 to the date of termination; seize the contractor's existing ‘performance bond’; seize the contractor’s retention sum; and seize and take ownership of all pieces of equipment and all other property used by the contractor on the Amaila Falls Access Road Project.
The Ministry of Public Works will also be taking steps for the continuation and completion of the remaining works, Benn added.
In response to further queries from the media on the contract termination, Benn explained that the performance bond, which is 10 per cent of the contract price, should have been paid before.
And to have a contract existing without a performance bond constitutes “a fatal flaw,” he added, while noting that there were other issues involved which led to the decision to terminate.
While the minister could not immediately say how soon works could restart on the project by new contractor/s, he offered that the possibility exists that some changes could be made, but those would not affect the project deadline of April this year.
As to how much money was advanced to the contractor, Fip Motilall, Benn was not in a position to answer, as such figures are still to be tabulated; but he assured that it is being urgently addressed and the figures will be made public.
"We will refine all the details in respect of the payments made, and provide that publicly in a few days’ time. There is a meeting this (yesterday) afternoon with the Permanent Secretary and the consulting oversight engineers to the project, to start tidying up those things and, more particularly, to put the arrangements in place so that the ministry can take possession of the worksites and the assets of the project," Benn said.
The contract was awarded to US-based Synergy Holdings Inc. to construct a road leading to the Amaila Falls to facilitate construction of the Amaila Falls Hydro-Electric Plant.
The contract was for “the upgrading of approximately 85 km of existing roadway, the design and construction of approximately 110 km of virgin roadway, the design and construction of two new pontoon crossings at the Essequibo and Kuribrong rivers.” A fourth part of the project was for the clearing of a pathway alongside the roadways, to allow for the installation of approximately 65 km of transmission lines.
But ever since the contract has been awarded, questions regarding the company’s experience in road-building and its capacity to undertake such a major assignment were floated in the public domain, even though Government officials had touted the company to have road-building experience in Florida and Georgia.
And, amidst controversy of whether the work was indeed ongoing, Motilall had promised to take media operatives to the project site for a first-hand view, but that promise never materialised.

Excerpts from the Guyana Chronicle
quote:
The new performance bond was required to be supplied on or before 10 January 2012. The company having failed to comply with this condition of the agreement for completion, Government notified the company of the termination of the construction contract and is currently taking immediate steps to invoke the other remedies provided for under the construction contract and the completion agreement.



Was this condition part of the original agreement? If not, then a competent court of law will find this invalid and not enforceable.
Mitwah

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