Latest update February 15th, 2025 6:20 AM
Feb 24, 2021 News
Kaieteur News – Three local insurance brokers have lodged a formal complaint with Public Works Minister, Juan Edghill against the Guyana Power and Light (GPL) for allegedly breaching procurement processes in relation to its 2021 Tender for the provision of Insurance Services-Generation and Other Equipment (GPL-PD-015-2021).
In a letter dated February 16 seen by Kaieteur News, members of the Guyana Insurance Brokers Association (GIBA) detailed that they are deeply “concerned and alarmed” with the conduct of GPL, its Officers and Directors with current procurement process allegedly rigged to favour the current insurance holder.
The GIBA said in its letter to the Minister, “This Association continues to raise alarms with respect to the perception of corruption and nepotism that seems to surround insurance tenders for public corporations and the perception that the result is an undermining of the tender process to the detriment of those public corporations, particularly, as we are aware that His Excellency, the President has indicated that the insurances for all government entities must be correctly and properly tendered.”
A prior complaint was lodged with the Public Procurement Commission (PPC) on January 6, 2021 relating to a 2017 Tender for the Provision of Insurance Services – Generation and Other Equipment.
In that letter, the three insurance brokers; Abdool & Abdool Inc., Raj Singh Insurance Brokers and P&P Insurance Brokers Consultants Ltd contended that GPL’s tendering process for 2017 straight up to 2021 lacked transparency and accountability throughout, producing awards which are not in conformity with tendering requirements.
The requirements on the 2017 tender document were specifically for “all risk” coverage and not “fire and special perils.” Other requirements included that the end cost to GPL be presented in full with no hidden costs, that brokers were required to supply qualitative and quantitative information and that insurers involved “had to be rated by AM Best or Standards and Poors at a minimum specified level with evaluation points proportionally awarded.”
Additionally, the Insurance Act of 1998 required that a locally registered insurer must act as a Fronting Company to avoid direct placement as prohibited by the act, which incurs fees for foreign insurers who want to do business in Guyana.
Further, it required that a specific withholding tax be levied on premiums exported by the fronting company as a specific percentage of the premium payable to the Guyana Revenue Authority (GRA).
The three local brokers submitted bids within the range of US $750,000 to US$850,000 while a fourth bid for US$624,061 was submitted.
The broker was awarded the contract on September 27, 2017.
The local brokers, with the combined experience of over 90 years, in the business are contending that the prices offered in the approved bid were not competitive.
Moreover, the brokers claimed that from their own initial investigations, nowhere in the world offers that rate, leading to the conclusion that GPL would not have been able to award the tender to the broker in question at the quoted price without compromising its own requirements.
The three local brokers noted as well that documentary evidence obtained even proves that GPL breached its own tender procedures when it accepted a secondary submission from the successful broker not included in the original amount tendered.
Later on in 2020, GPL advised for tenders for the same project.
However, with the successful broker already possessing the pertinent information on tender, it puts the complainants at an unfair advantage.
The three brokers then wrote to GPL seeking extension, one they detailed was “reluctantly granted” with a new tender submission date of May 14, 2020 set.
But then on April 7 that year, the complainants were informed by GPL that the extension was suspended and the tender stopped with the award going to the broker holding the continued placement.
“The situation to date remains the same and essentially means that the corporation continues to be in breach of tender board procedure in what we believe are deliberate and calculated manoeuvres to ensure that the broker in question by default, benefits from GPL’s business to the detriment of the Corporation’s access to a competitive bid process,” the complainants said.
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