Dear Editor,
There are serious concerns about the planned renewal procurement process by government of Karpowership to continue supplying electricity to GPL. The initial contract was intended as an emergency measure to add power generation capacity while Guyana’s larger gas-to-energy project is delayed which may not come on stream till end of 2027. The original contract has expired and government is seeking to renew the contract but under a larger generating plant on the ship. Questions have been raised about whether renting larger floating generators using diesel is the most economical solution to power shortages.
The original agreement has not been fully disclosed to the public, fueling suspicions of massive corruption. Transparency and accountability were missing in the original tendering process; the contract was awarded to a foreign company as an emergency even though local companies could provide the same services at one third the price. The government opted for a more expensive foreign company and diesel supplied by a Qatari company. The local contractors are known to oppose kickbacks. It is not in some people’s interests to tap into services of local companies reluctant to pay kickbacks.
Based on recent exposition of plans to corruptly extend the contract as an emergency, government held off on renewal of the same ships at a much higher cost. As in the original contract, transparency is missing in the talks for renewal of the contract. The plan now is to contract a larger power ship from the same company producing more electricity. The economy of scale would suggest that price per unit should be less than the previous small ship. But under the planned new contract, per unit cost would be much higher. Government will shell out more money but consumers won’t pay less.
Watchdog groups raised concerns about the original contract and are doing so again in the planned renewal. Sole sourcing and emergency procurement with limited disclosure creates conditions for corruption. We need tendering and openness in the renewal process.
The cost of leasing and fueling the two ships has been substantial. Why is the government switching to a larger diesel operated barge that will burn even more diesel that pollutes the environment. The power ships burn heavy fuel oil/diesel, which are more expensive than the natural gas expected from the gas-to-energy project. A company could have utilized the free gas to supply electricity at lower than the gas to shore project and one third that of Karpowership.
The Government often invokes emergency circumstances to justify rapid procurement decisions.; are preferential companies and kickbacks the motivation? Urgency is a cover for kickbacks and secrecy. When contracts are negotiated behind closed doors, key terms remain undisclosed, and competitive bidding appears limited or absent, resulting in suspicion about the contract.
Why hasn’t the public been given full access to contract details and the basis upon which suppliers were selected. These concerns become even more significant when additional and larger barges are being procured, increasing the financial burden on tax payers. Why is government insisting in using expensive heavy diesel fuel instead of free gas. The expensive oil is bought under a special arrangement with the Qataris. Why a Qatari company? Why isn’t fuel supply being tendered. Why isn’t a local company not permitted to be the supplier? If the contract must be with Karpower, why not have free gas powered barges instead of having Qataris supply diesel at hundreds of millions of American dollars annually. Using gas will save the country hundreds of millions of American dollars per year.
The public has a right to know how and why major power procurement decisions are made and why certain companies are preferred.
Yours truly,
Nathan Barton
