Audit ongoing into aggregate contracts awarded by Public Works Ministry

The content originally appeared on: INews Guyana
Public Works Minister Juan Edghill

See full statement from the Ministry of Public Works:

Upon assuming office in 2020, the Government has been progressing an unprecedented developmental agenda. This includes a key focus on improving transport infrastructure, country wide and results in the stoking of the nation’s economy, job creation and wealth circulation.

This placed a tremendous demand on the local aggregate (crusher run and stone) supply which saw prices, in some places increasing by 100%.

During 2022, in an effort to understand the capacity of the current market, Government met with several noted local aggregate providers/quarries and new quarry operators to ascertain their capacity and logistical challenges.

Contractors were also given the opportunity to import aggregate materials in an effort to meeting the demand and to keep the rate competitive.

It was learnt that the local market could not, at this time, service the demand sufficiently and as result, severe price increases were experienced.

In November 2022, the Government sought to determine the short and medium term requirements for aggregates and the Ministry of Public Works’ WSG determined the following:

Year
Estimated/Established Demand (mt)
2020
61,300
2021
401,700
2022
1,337,000
2023
2,521,000
2024
3,220,000

To help support the projected and experienced demand, in November 2022, the Ministry of Public Works conducted a Public Tendering exercise for the Supply of Materials: Lot 1 – 200,000 Tons Grade ‘A’ Crusher Run and Lot 2 – 100,000 Tons ¾” Mins Stone (NPTAB # 167/2022/31). This process yielded a participation rate of 8 bidders and was awarded at a negotiated price of G$9,000 per ton for 200,000 tons. This still resulted in a deficit of over 1,100,000 tons.

During the period while the public tender was ongoing, country wide there was much outcry in the construction and associated sectors of the massively high prices for aggregates. This drove up the cost of construction for both the Government, Private Sector and Residential Construction. In December 2022, while the procurement was being formalized for the Open Tendering Exercise, the aggregate shortage was becoming even more exacerbated.

As such, and having conducted a public procurement process, and bearing in mind the over 1,100,000 tons supply deficit, the Government engaged 8 other suppliers much lower value contracts using Single Source Method of Procurement as catered for in the Procurement Act of Guyana. These suppliers were all vetted, samples of their aggregates tested and rates agreed upon to be in keeping with fair market value. This amounted to approx. 985,000 tons and sought to cater for the demands in regions 2, 3, 4, and 6; all of which had extensive projects being executed.

Government’s initiative on this matter through the servicing of these contracts resulted in a swift and dramatic decrease in prices across the coast – in many cases from G$16,000 per ton to the price of $11,500 per ton – a nearly 30% decrease and normalizing the market.

During this period the market started to respond. New quarries started to produce, more barging services was made available, importation procedures became more streamlined and naturally, the private sector suppliers became more efficient and therefore cheaper.

In light of this normalized price and the projected 2,500,000 tons of demand in 2023, however, Government still sought to maintain its position within the aggregate market to guard against any future unwarranted price increases. As a result, in March of that year, the Government, went forward with another Public Tendering exercise for the Procurement of Aggregates (NPTAB # 41/2023/31). This process yielded a participation of 12 Bidders and awards to 3 Bidders at approx. $10,750 to $12,000 per ton for Crusher Run and $12,000 to $12,500 for ¾” and ½” aggregates for an overall total of 400,000 tons of aggregates. Additionally, Government also engaged in 6 contracts using Single Source Method of Procurement in accordance with the Procurement Act of Guyana all of which amounted to just over 485,000 tons. It must be noted that each of these contracts yield per ton prices of around  US$50 per ton.

This would have effectively resulted in approximately 35% of the country’s aggregate requirements being catered for while leaving sufficient space in the private sector to allow for maintained operation and growth.

The management of the aggregates is being handled by a dedicated team using peer reviewed standard operating procedures and supported by substantial laboratory testing with intermittent audits, both by internal and external parties. As a matter of fact, an audit is currently ongoing by the Office of the Auditor General of aggregate contracts and their implementation to ensure that the Ministry of Public Works is fully compliant with all of the requirements of the Laws of Guyana.

The Ministry of Public Works remains committed to ensuring value for money, transparency and accountability.