HDC: China contract done legally

Negotiations between the China Gezhouba Group International Engineering Co Ltd (CGGC) and the Housing Development Corporation (HDC) for the construction of 5,000 housing units across TT, including 235 units at Lady Hailes Avenue in San Fernando, and 204 at South Quay in Port of Spain had taken approximately one year before a contract was enacted between both parties.

That’s the word from the HDC which, in an emailed response to questions from Sunday Newsday about the contract’s cancellation, also stated that the HDC’s board had acted “within their remit” in awarding the contract.

“The costs and other associated matters related to the contract were determined after a year of negotiations between both organisations. This contract was executed legally and was conducted with the authority of the board, who acted within their remit.”

At last Thursday’s post Cabinet media briefing, the Prime Minister said the contract had been scrapped and the HDC would be restarting the tender process for the housing units.“HDC has been instructed to go back out to tender, because there were some parts of that contract which did not meet the Cabinet’s acceptance and approval, structurally and legalistically. So that contract has been stopped. We are not going forward with it in the way in which it was produced,” he said.

In its statement, the HDC said Government had decided to “revisit some basic elements such as unit size and room numbers” after further review of the contract.“The product is therefore now being reworked and new tenders will be opened soon.”CGGC was responsible for the “financing, design, procurement and construction of the housing blocks” and the associated infrastructure for the developments. Meanwhile, in a blog post, past-president of the Joint Consultative Council for the Construction Industry (JCC), Afra Raymond raised several issues including why the contract sum for the first phase was stated in US dollars and not TT dollars. He said with the contract sum equivalent to TT$490 million, the average cost per unit would exceed TT$1.1 million and that is without factoring in the cost of the land.“There is no way that price can be considered affordable," he said, noting that official figures from the Central Statistical Office (CSO) for 2014 state that 60 per cent of the country’s households have a monthly income below TT$9,000.“The estimated monthly instalment for a $1 million mortgage for 20 years on the most favourable interest and (is in the) $5,000 plus range. What is more, the monthly income an applicant would need to qualify for that mortgage would be in the $18,000 range.”

He said some critics have questioned the lack of tenders but noted that is a part of how the programme is meant to work.

The HDC launched its Housing Construction Incentive Programme (HCIP) in 2016 to encourage investment from contractors who would design, finance, and build new homes on public lands. The fundamental principles being that the private sector deploys its capital to provide new homes and that no public money is required.

An underlying aspect is that the construction, design, market and financial risks are carried by the private sector. On that basis, the case was made that suitable contractors could be selected from applicants without the need for tenders which would arise in a conventional contract.Raymond also questioned the percentage of local content to be used on the project given the “poor record of Chinese contractors in engaging local professionals, labour, materials or subcontractors.”

“It surprised me to see those claims. I did wonder if any percentages, monitoring procedures or penalties had formed part of this contract.”

And about CGGC itself, Devex, a Washington, DC-based media platform for the global development community, stated that CGGC is “one of the most competitive listed companies with very strong financing capabilities.”

“As a transnational operation enterprise with the fastest growth in China, CGGC’s has expanded its business in more than 100 countries and regions, ranking among the foremost 100 in the Engineering News Record Top 250 International Contractors.”

Efforts to contact both Housing Minister Edmund Dillon and Attorney General Faris Al-Rawi, who is also San Fernando West MP, were unsuccessful. Some 235 units would have been located at Lady Hailes Avenue as part of the San Fernando waterfront development project.