Guyana halts payment to CHEC; threatens legal action, debarment over CJIA extension

The Guyana government is rejecting a demand for additional payments from China Harbour Engineering Company Limited (CHEC Ltd), the Chinese company hired to expand and modernise Guyana’s Cheddi Jagan International Airport (CJIA).

At the same time, the government is demanding that the extension be delivered in keeping with the specification of the contract and threatens that any failure to comply will result in legal remedies and debarment of the company in Guyana.

In a December 08, 2020 letter written by Attorney General (AG), Anil Nandlall and addressed to CHEC’s Chairman, Mr Lin Yizhong, the AG, who said he was acting on behalf of the government, reminded that in accordance with the terms of the contract, CHEC’s obligations are to carry out the planning, design and extension of the CJIA, which is listed as one of the top priority development projects of Guyana.

The project includes the construction of a new terminal building and the extension of the existing main runway to allow for Code E Aircraft operations at CJIA.

The government had said previously that once completed, the airport should have an extended runway, taxiways, and aprons with a capacity for eight standing aircraft with facilities for eight air bridges.

Nine years after the first contract was signed in 2011, the government complained that CHEC has failed to deliver works as defined in the contract.

“Your company has failed to satisfy the employer’s requirement, contractor’s proposal and schedules and all works necessary for the stability, safe and proper operation and completion of the whole works,” the letter stated.

Nandlall was keen to note among the company’s failures are attempts to remedy all defective items for the entire project, after the issuance of notice to correct.

President Irfaan Ali, who personally toured the airport, had refused to accept the work done while also committing to taking the necessary against CHEC to ensure Guyana gets what it bargained for.

Additionally, the government said CHEC has failed to achieve substantial completion. Moreover, the government complained of failure to complete the whole of the works within the time of completion for the works although it said back in October that by the end of 2019, the project was 97 per cent complete but the General and Regional Elections of 2020, coupled with the global pandemic, forced CHEC to significantly reduce its workforce, which affected the Project’s completion.

“Our dissatisfaction with your performance and your breach of contract have already been reported by our Ministry of Public Works to the Chief Executive Officers of the Export-Import Bank of China and by our Prime Minister to Mr. Wang Tongzhou, Chairman of China Communications Construction Group, your parent company,” the letter added.

In these circumstances, the government rejected all and any unilateral demand for additional payments and in turn demanded the specific performance of the contract in the manner provided for and contemplated by the contract.

The Guyana government through the Ministry of Public works had entered into a Fixed Priced Contract to the tune of USD$138M with CHEC Ltd. on November 11, 2011.

The contract was amended in 2014, 2015, 2017 and 2018 by an addendum, collectively forming the underlying contract. In October, CHEC issued a statement of its own to offer clarity on changes to the original specs but also said it was cooperating with the government.

The comment came weeks after the government identified what it said were glaring inefficiencies and shortcomings in the US$138 million expansion project.