Luncheon, Ramsammy differ on cost overruns for Hope Canal Project

Jan 08, 2015 News

Whether there are or aren’t cost overruns for the $3.6B Hope/Dochfour Canal which is now heading toward its sixth deadline, Cabinet Secretary Dr. Roger Luncheon and Minister of Agriculture, Dr. Leslie Ramsammy, have differing opinions.
Dr Ramsammy was recently asked if there are major costs overruns on the Project. “The macro structure is completed. There is some associated work to be completed but there are no cost over runs.”
He said that the associated work has to do with backfilling and operator building for the project. Commenting on the failed deadlines, Dr Ramsammy retorted that Courtney Benn, one of the contractors on the project, requested an extension. He added that the quality of work thus far is “excellent.”
He also stated that the Ministry was faced with two decisions, either terminate the contract which would have caused more extensive delays and cost over runs or choose to the route of extension of the deadline at “no cost.”
But Dr. Luncheon who was asked about whether Cabinet was updated on the reasons for the delays of the project and the likelihood of cost overruns, yesterday said that he is aware that the project is on its sixth deadline, and that a series of “ponderables” delayed it.
He said that Government is now looking at a 2015 second quarter deadline and “of course there are cost over runs.”
Dr. Luncheon said, though, that he would not be able to qualify the overruns sustained. They would be calculated when the project is finished and the defects liability is invoked, he added.
The Head of the Presidential Secretariat explained, “Contractors have failed and therefore there are penalties in the defects liability. When the project is completed and you go into the defects liability it is at that point in time where this netting off takes place.
“There are expenditures that contractors and consultants would have to bear. Let us assume that there is $10 worth of overruns and you can recover $6 then you have a $4 overrun. It might be a big sum or a small one but it all depends on what you can recover.
“However, once you have expenditure that cannot be recovered and funds need to be made available you cannot expect to have project delay because millions are outstanding. The value we are left with, the treasury will have to meet the costs.”
Last year, Dr. Ramsammy had reportedly explained that there are several aspects of the Northern Relief Channel at Hope/Dochfour, East Coast Demerara that have to be completed before the canal could become operational.
He had said that the Head Regulator aspect, which was constructed by BK International, is complete.
As it relates to the state-of-the-art wrench, Dr. Ramsammy noted last year that since the completion of this component was dependent on a delayed aspect of the overall project, the Agriculture Ministry made some modifications.
These included an adjustment to the system originally intended to open the doors of the Head Regulator. The new system, for which the wrench is required, will allow for easier opening and closing of the door. After months of delays, Ramsammy confirmed last night that the wrench is finally here and in place.
Additionally, there have been concerns raised by local letter writers on the Hope Canal Project. Charles Sohan, in his latest letter, published in the Kaieteur News, said that the Hope Canal project which is the brainchild of former President Jagdeo and Natural Resources Minister Robert Persaud, is not only ill-conceived but hurriedly put together without any feasibility study.
The Hope Canal project has been deemed to be one of the largest infrastructure programmes in Guyana’s history. It has been purported that the relief channel would have the capacity to withstand floods greater than that which occurred in 2005.
It is being constructed to ease the pressure of water on the East Demerara Water Conservancy at times when the conservancy reaches its maximum capacity. The canal would release he excess water it into the Atlantic Ocean, via the sluice.
The eight-gate sluice to release the water is being constructed by Courtney Benn Construction.

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Luncheon, Ramsammy differ on cost overruns for Hope Canal Project

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