Another Scandal in the Water and Sewerage Corp.

PRESS STATEMENT
By Progressive Liberal Party
February 27th 2011

PLP RAISES VERY SERIOUS CONCERNS WITH ESTIMATED $240 MILLION 20 YEAR CONTRACT AWARDED TO CONSOLIDATED WATER BY WSC WITHOUT PUBLIC TENDER FOR REVERSE OSMOSIS PLANT

After receiving information from sources within the Water and Sewerage Corporation (WSC), the Progressive Liberal Party (PLP) raised several questions, as per attached Press Statement, regarding the relationship between Jr. Minister Phenton Neymour, General Manager Glen Laville and Senior Manager Mario Bastian, who was recently re-instated in his job.

The questions raised in the press statement, which included references to alleged impropriety in public tendering processes, were meant to embolden the Corporation’s Board and cause a full review by the Board and Corporation documents and processes.

The PLP is in now in possession of information that confirms that WSC was seeking unsolicited bids for the construction of a Reverse Osmosis (RO) plant at Arawak Cay.  These bids were requested by both Mr. Laville and recently Mr. Bastian.

While it is understood that at least one company responded, it is also understood that others did not respond  because it was commonly believed, amongst the water producer community, that WSC was merely conducting a ‘price fishing expedition’ for Consolidated Water Company (CWCO).

In light of the recent announcement by CWCO and WSC, that they “entered into a binding letter agreement” to increase the daily production capacity of its Blue Hill Plant, “by approximately 67% to 12 million U.S. Gallons” – it is clear that the suspicions raised by the water producers were correct.  However, more specifically, it is obvious that either the Board did not perform its due diligence or were not allowed to.

The PLP views this as another attempt by the government to circumvent due diligence & procedure and award another lucrative contract to a ‘friendly’ concern.

<span>The PLP now finds it necessary to alert the public, of what we consider to be a highly questionable & sinister development, namely WSC’s decision to enter into a substantially new water contract with CWCO, which will significantly impact the public purse and perhaps the environment, without going to tender. </span>

The PLP reminds the FNM Government of its 2007 Trust Agenda pledge that Ministers will be accountable to Parliament for the policies and operations of their agencies; and that Ministers ‘must be open with Parliament and the Public’; and herewith calls upon Sr. Minister Earl Deveaux and his Jr. Minister Neymour, to immediately provide the Bahamian Public and the Loyal Opposition with answers to the following:

1.            What are the implications of CWCO being placed in a monopolistic position in water delivery in New Providence, given the questions surrounding BTC and the documented history of contractual volume delivery challenges by CWCO at both the Windsor & Blue Hills plants?

2.            Was the rationale provided by the former board, that it was too large a risk to allow a single company to monopolize water production in New Providence, still relevant?

3.            Is the current Board and the government aware of the existence of such a document and that the current Financial Secretary was in full agreement?

4.            Was there a contrasting rationale or any commentary offered by the current Board?

5.            Have conditions changed dramatically since the initial decision to warrant a reversal at this time?

6.            Have all legal issues regarding the awarding of the current Blue Hill Reverse Osmosis plant contract to CWCO been settled?

7.            On what legitimate legal ground was the decision made to give CWCO a $240 million 20 year contract to increase its water production <span>and</span> what international procurement guideline was cited as support for this questionable decision?

8.            If the contract is deemed legitimate, what were the rationale and justifications for extending the existing contract for Blue Hills by 5 years, with 67% increased volume, for the same cost?

9.            Are responsible Ministers aware that the there is a fundamental ‘rule of thumb’ in the water industry, that the higher the RO volume, the lower the cost; and that they are effectively giving Consolidated Water a larger profit margin for an existing contract, on the backs of Bahamians?

10.        What was the effective date of this deal between Consolidated Water Company and WSC? (The evidence suggests that the deal was sealed long before it was announced).

11.        Given the fact that CWCO’s Windsor location is maxed out with an expiring contract and the Blue Hill plant is operating at full capacity, is WSC considering allocating additional land to CWCO and how much?

The Progressive Liberal Party strongly contends that this announced arrangement with Consolidated Water is not an extension as claimed but ‘additional production’, that requires a new plant, and should have been correctly identified as a new project and put out to public tender. Additionally, in light of a similar giveaway of a public revenue stream at BTC, the PLP decries the dry audacity of the persons behind this sleight of hand and will be requesting, in Parliament, that all relevant documents pertaining to this transaction be tabled for full review.

The government and more specifically Ministers Deveaux & Neymour, who both continue to be embroiled in controversies, are asked to provide concrete evidence to show why this contract with Consolidated Water should not have been considered a separate contract and put out to tender.

Also contained in our information package is irrefutable evidence that at least one of the unsolicited bids offered a cheaper option than the announced CWCO expansion cost.  This bid was sent to the corporation, addressed to Mr. Glen Laville and should be in the corporation’s files.

In view of the above and in the best interest of the Bahamian public, the Progressive Liberal Party once again calls upon the Government to investigate the alleged corrupt practices at the corporation and specifically the following:

1.      The connection between Jr. Minister Neymour, GM Laville and Mr. Bastian;

2.      Allegations that at least one major international player has cited WSC’s history of a lack of transparency in international tender processes as the reason for their refusal to engage in any procurement exercise in The Bahamas;

3.      The real cost of water delivery at the Blue Hills Reverse Osmosis Plant, including current diesel delivery;

4.      The impact of Consolidated Water Company’s NRW program and an Independent review of Non-Revenue Water (NRW) losses in New Providence, including an explanation of why, after an alleged improvement of 1 million imperial gallons per day, NRW losses have increased from 53% to 56% of daily production;

5.      The next target on the insiders’ hit list of giveaways and deals;

6.      Confirmation that members of Cabinet, with the exception of Jr. Minister Neymour and perhaps Min. Deveaux, were not aware of the circumstances leading up to this attempt to, once again, circumvent due process at WSC.

Once this review is conducted, the PLP is of the considered opinion that the Government will have to put an immediate stop to the systematic giving away of assets and non-bid deals at WSC.  If not, the PLP commits to continuing its public naming and shaming to expose corrupt operatives, the eventual purging of all unsavory practices at WSC and eventual prosecution of  deserving culprits.