Confidential report: water plant would have made $4m loss with Bahamian group
By NEIL HARTNELL
Tribune Business Editor:
A CONFIDENTIAL review conducted for former Prime Minister Perry Christie on the "faulty and chaotic" bidding process for the Arawak Cay reverse osmosis plant found that there would have been "a loss of $4-$5 million" during the plant's life had the Water & Sewerage Corporation gone with a Bahamian investor group's bid.
The January 25, 2006, review carried out for Mr Christie by financial advisor Deepak Bhatnagar described the "introduction" of BK Water - a group headed by current PLP Senator Jerome Fitzgerald and Mark Finlayson - into the bidding process, and the issuance of a conditional acceptance of its offer, as "not in order", citing numerous reasons.
The report detailed how then-Water & Sewerage Corporation general manager, Abraham Butler, on November 8, 2005, made a recommendation that BK Water be awarded the Arawak Cay contract following a November 4, 2005, meeting with "the Hon. Minister of Works" who, at the time, was Bradley Roberts.
Mr Bhatnagar's report indicates that the November 4, 2005, meeting was designed to see how any obstacles preventing the award of the contract to BK Water - whose members are well-known PLP members and supporters - could be overcome.
"The (November 4) meeting 'authorised' a second review to permit administrators and the accountants of Water & Sewerage to evaluate differences or variations that 'prevents the execution of a contract between Water & Sewerage Corporation and BK/Veolia'," Mr Bhatnagar's report said.
Following these goings on, Mr Butler on November 11, 2005, sent a letter informing BK Water that it had won the Arawak Cay contract subject to Cabinet approval. Such approval was not forthcoming.
Mr Bhatnagar's report appears to contradict assertions by Mr Roberts that he had no involvement with the Arawak Cay reverse osmosis plant contract, referring to "discussions held on price, technical and legal issues" involving the Veolia/BK Water bid that were followed "by a meeting between Water & Sewerage, Veolia and the Minister of Works on October 7, 2005."
As a result: "Minister (Mr Roberts) instructed both parties to resume discussions and resolve by October 14, 2005, inclusive of a revised pricing policy by Veolia." BK Water was Veolia's Bahamian partner.
And Mr Bhatnagar's report refers to "further discussions held between Veolia, Minister and chairman in Barbados" at a conference, with a revised proposal received from Veolia/BK Water on October 19, 2005.
The report seems at odds with Mr Roberts' claims that allegations linking him to negotiations with Veolia/BK Water over the Arawak Cay plant were "utter BS".
"In general, it appears that the procedure followed in consideration of the bids by the Board and management of Water & Sewerage for the Arawak plant is faulty and chaotic, and I have detailed my findings based on my examination of the Board Minutes, which indicates that there is no proper record of consideration of the bids and/or approval of the bids right up to the issuance of the conditional letter of acceptance to BK Water," Mr Bhatnagar told the then-Prime Minister.
"A similar faulty procedure was followed in the Blue Hills reverse osmosis plant project, whereby at one stage Biwater was agreed to be issued a letter of acceptance. This has resulted in Water & Sewerage having to face litigation from Biwater in the form of an injunction."
Outlining the confused bidding process for the contract to build and operate the Arawak Cay reverse osmosis plant, which would sell water to the Water & Sewerage Corporation, Mr Bhatnagar's report details how the original process was annulled on June 22, 2005, by the Corporation's Board. Instructions were then issued to negotiate with Veolia.
No mention was made of BK Water at this point, reflecting the Board's desire to deal with Veolia instead. It wanted to develop a strategic partnership with "a viable organisation", and Mr Bhatnagar said: "This surely meant the Board was to create a strategic partnership with Veolia and not BK.
"The latter was formed only for the purpose of the Arawak Cay reverse osmosis plant, and does not have any track record either in the Bahamas or internationally. As per letter from Higgs & Johnson, BK Water is controlled by Messrs Jerome Fitzgerald, Mark Finlayson, Prince Wallace and Judson Wilmott."
Handing the contract to BK did not meet the "strategic partnership with a viable international organisation" condition, Mr Bhatnagar wrote, because Veolia would not be involved in the Arawak Cay plant's operations. Nor was there a true joint venture partnership between BK Water and Veolia, but a contractor/sub-contractor relationship.
"The Board ought to have pursued negotiations with Veolia," Mr Bhatnagar concluded.
"But the process got polluted with the emergence of BK Water and Board's entertaining to deal with BK Water rather than Veolia.
"The focus of forming a 'strategic partnership with an international company' was altogether lost."
May 06, 2010
tribune242
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