Chinese Company's Harbour work done at Lae Basin is defective : Opposition

Lae Tidal Basin 

PORT MORESBY: Leader of the Opposition,  Don Pomb Polye has revealed that work carried out at the new Lae Port by contractor firm China Harbour Engineering Company (CHEC) is defective and obvious to the naked eye, with defects that will cost a minimum of K200 million in variations to rectify.

“The contract was awarded to China Harbour Engineering Company in 2013 and the resulting defective work was handed over in late 2014. This celebrated handover was premature and should not have taken place, since the major defects were obvious.” asserted Mr Polye.

“The port is not usable and operators refuse to start work there. This not only means a major loss of income for PNG but also for the past 2 years we have been paying the interest on the borrowed funds, close to K1 billion borrowed for this project, and we have to keep paying that until the port is ready to be used how ever long that may take!” Polye further stated.

According to well-informed sources, the Opposition Leader said that the contractor China Harbour Engineering Company has refused to co-operate with the Government of PNG and go back to the construction site and start remedial works.

“And what does the O’Neill Government through PNG Ports do about this? They shortlist the same contractor, China Harbour Engineering Company, to be awarded phase II of the same project! Before the tender process for phase II is finalised China Harbour Engineering Company publicly announce that they have been awarded the contract! Why?

I suspect it was so that China Harbour Engineering Company could submit even more variations to cover their cost of repairs for phase I of the project – a cost they themselves should fully accept and meet from their own budget as is the norm in this situation!” said Polye.

Polye further explained that the PNG government had 2 reports undertaken to investigate and identify the problems of phase I of the project, which found that the total cost to resolve CHEC’s defective work, would cost the Nation over K200 million.

The O’Neill Government and PNG Ports Corporation have refused to formally release the findings of these reports into the mismanagement and swindle perpetrated by CHEC.

Thus, the project has left PNG with a K1 billion debt with no income generated from the new port due to the O’Neill Government’s engagement of a corrupt and blacklisted contractor who was incompetent and of extremely questionable repute.

The Advisory Report on the Design and Construction Issues undertaken and presented to PNG Ports Corporation Ltd on Phase 1 of the International Container Terminal, PNG, by CULLEN GRUMMITT & ROE, reveals profound and glaring defects that will cost the State an additional K200 million to remedy it.

The report clearly states that, “…the work is sub-standard in many respects, often extremely sub-standard. Even the concept design contained basic errors. Errors of layout, clearances for vehicle operation and concept errors in many parts.

The “As built” drawings…appear not to be “as built” but to be “For Construction” through the contract required.” (The Advisory Report on the Design & Construction Issues for PNG Port Corporation Ltd on Phase 1 of the Construction of the Lae International Container Terminal, PNG, 2.0 Executive Summary, page 4)

“The contractor in question, the China Harbour Engineering Company (CHEC), is already known in other countries such as Sri Lanka, the Philippines and Jamaica for its corrupt, fraudulent and collusive practices with regards to previous contracts it had undertaken.

As a result, these contracts awarded to CHEC were terminated and the company was placed on the Word Bank’s black list. This raises several questions then: how can the O’Neill Government through PNG Ports engage such a company in the first place?

The evidence is clear yet why has the Government not taken CHEC to court for fraud and failing to meet its contractual obligations?

Why has the Government not released the findings of the investigative reports they commissioned against work carried out by CHEC? Why was the same dubious company been awarded the second phase of the project prematurely when they failed to meet the quality and budgetary standards of the first phase of the very same project?

Has the O’Neill Government knowingly colluded with the CHEC to produce a shady, low quality and failed project for the Lae Port which has undoubtedly led PNG into yet more mistakes and more debt – to the tune of K1 billion!”, asked Mr Polye.

“The Opposition is of the opinion that the O’Neill Government deliberately chose to engage a black listed company of the worst repute to undermine, deceive, swindle and damage Papua New Guinea’s reputation for its own benefit with total disregard for our Nation’s and our people’s economic situation or our integrity! The current Government is just as corrupt and shady as the China Harbour Engineering Company!”

The Opposition will take these immediate actions:

i. Write to several State authorities to act accordingly to stop China Harbour Engineering Company from being awarded the Phase II contract of the construction of the Lae International Container Terminal. The appropriate authorities will be the National Fraud Squad, the Ombudsman Commission, PNG Ports Corporation Ltd and other relevant bodies will be alerted immediately;

ii. The Prime Minister of Papua New Guinea and his Cabinet will be written to, to demand an explanation to the people of Papua New Guinea as to why a World Bank black listed company who continues to build substandard infrastructure in PNG is short listed not only for the second phase of the Lae International Container Terminal project but also the four land highway construction for the Western Highlands Province;

iii. The Ambassador of the People’s Republic of China will be written to, to formally advise their government of the China Harbour Engineering Company (CHEC) compromising quality control and abuse of design and construction of the Lae International Container Terminal project and thus costing K200 million in excess. The company CHEC must be made to pay by the government of the People’s Republic of China.

I will ask the Chinese government to take the appropriate actions on the CHEC because what CHEC has done in PNG destroys China’s business and investment reputation in PNG;

iv. Write to the World Bank and the Asian Development Bank to further black list the CHEC so that the CHEC will be made to fix the defects of the Phase I of the Lae International Container Terminal project;

v. The Opposition will seek legal advice as to taking the matter to court, to ensure that the CHEC and other State actors are penalised for their extremely substandard and assumingly corrupt work on the Phase I of the Lae International Container Terminal project.

Press Release  / Photo credit: Kumuls Holdings