Statement by Minister Ramnarine on Beetham Wastewater Plant

ENERGY MINISTER KEVIN RAMNARINE PRESENTS REPORT FROM NGC ON BEETHAM WASTEWATER PROJECT TO PARLIAMENT

FRIDAY MARCH 14 2014

Background / Rationale

Mr. Speaker, the NGC and WASA entered into a Memorandum of Understanding (“MOU”) to work together for the construction and commissioning of a Water Recycling Plant in the vicinity of the existing Beetham Wastewater Treatment Plant with the objective to supply water for industrial consumption to the Point Lisas Industrial Estate. The genesis of this collaboration was initiated between National Energy (a subsidiary of NGC), and WASA since 2005 and titled “Partnering for Successful Development of the Energy and Water Sectors in the Interest of Sustainable National Development”. This culminated in the signing of an MOU on January 6^th 2006 between both companies. This was signed by former Presidents Prakash Saith for the NEC and Errol Grimes for WASA. This was therefore a project that was conceptualized by the former PNM administration.

The Water Recycling Plant is an initiative designed to recycle wastewater to industrial standard and use it to supply the Point Lisas Industrial Estate (currently, treated water from this facility is pumped into the sea). This requires new pipeline infrastructure to transport the water over land to Pt. Lisas. This project will be the first to include water recycling among the nation’s menu of technologies for water provision. The existing modalities of water supply are: surface water, ground water and desalination.

The Beetham Water Recycling Plant will provide 10 million gallons of water per day to Pt. Lisas, thereby freeing up water for distribution to domestic customers across the country. This additional 10 million gallons of water per day will provide a full-time water supply to over 150,000 people and positively impact over 200,000.

The Point Lisas Industrial Estate is a major consumer of water using an estimated 23 million gallons of water per day. It should be noted that water is also required in power generation. If that supply is compromised and the operations of the Estate are negatively affected this country would experience severe economic consequences. The reality of such an event became apparent during the 2010 Dry Season in which the water supply became so critical that it almost led to the complete shutdown of the entire Point Lisas Industrial Estate and the Petrotrin Pointe-a-Pierre refinery. The project is therefore of critical importance from the perspective of water security and energy security.

This project will ensure sustainability of a large sector of NGC’s consumers. NGC and WASA each has existing and crucial “right-of-way” availability on land which, when combined, provides a much more cost-effective option than a marine pipeline to Pt. Lisas.   This project will be funded and managed by NGC and, when completed, NGC will be responsible for its operations.

NGC retained CPG Consultants Pte Limited (“CPG”), an international firm with expertise in water recycling to undertake a technical feasibility study and assist in developing the Request for Proposal (“RFP”) and an Evaluation Methodology. CPG also secured the expertise of KPMG to assist in this project.

A technical team comprising employees from NGC, WASA and CPG examined both engineering and financial feasibility of this project and prepared the RFP for the facility. The RFP included preliminary design work, process design, equipment specifications, plant layout and “right-of-way” for pipeline construction. As such, with this high level of pre-bid engineering, it was determined that the bid period of eight (8) weeks was sufficient for the submission of proposals.

The RFP process

The process of this RFP was conducted in strict accordance with “The National Gas Company of Trinidad and Tobago Limited Tenders Rule, Procedures and Standing Orders 1998 for the Supply Of Goods, Works and Services and For The Disposal of Unserviceable and Surplus Goods” (as last amended in 2009) referred to as “the Rules”.

The process was conducted in accordance with the “two-envelope system”, whereby bidders are required to complete and submit separate packages Envelope A – Technical Proposal and Envelope B – Financial Proposal. This two-envelope system facilitates selection of suitable proposals through a systematic process, such that only financial proposals from bidders that demonstrated suitable technical competence are assessed.

The proposals were assessed utilising a predetermined evaluation methodology which was further subdivided for the specific assessment in the Technical and Financial areas. This predetermined evaluation methodology clearly identified how the overall combined scores from the Technical evaluation and the Financial evaluation would produce a total score for each bidder.

The highest overall score is the best bid and it should be noted that the one with the lowest overall price may not be the best bid.

The following is a summary of the process from issue of the RFP to award of Contracts for this Project:

1)      On 2^nd September 2013 Notice of the RFP was published for which the initial closing date was October 28^th 2013..

2)      On 25^th September 2013, a Site Visit held with prospective bidders. The prospective bidders were given a period of approximately five (5) weeks from viewing documents/purchase to submit Request for Clarifications.

3)      Fourteen (14) companies purchased the RFP Packages.

4)      On 9^th October 2013, the Request for Clarifications period closed to ensure that NGC’s Engineers and Consultants had sufficient time to issue responses and give ALL prospective tenderers sufficient time to effectively review documents to compile their proposals. Clarifications were issued by addenda and to all purchasers throughout the RFP period in response to several Request for Clarifications.

5)      On 10^th October 2013 NGC received eleven (11) Letters of Intent out of the fourteen (14) companies who purchased packages by which they confirmed their intentions to submit proposals for this Project at the closing date of 28^th October 2013.

6)      Requests for Extension of Time  were received as follows:

–          16^th September 2013 (Super Industrial Services Limited) – this was not granted.

–          27^th September 2013 (Universal Projects Limited)

–           28^th September 2013 (UEM India Private Limited)

As a result, after reviewing the request received NGC’s engineers and consultant’s granted an extension to 2^nd December 2013.

Other request was received on:

15^th November 2013 (Technologica Intercontinental and WOG Group) and were again reviewed and the second extension was granted with a new closing date of 10^th December 2013.

7) As a result of these extensions of time, companies were given a fourteen (14) week timeframe to submit their proposals.

8) The RFP package informed companies clearly of the 5 Stages of the predetermined evaluation methodology with a breakdown of the parameters and the weightings of 70% for technical proposal and 30% for financial proposal.

9) The detailed predetermined evaluation methodology was developed by KPMG (subcontractor to NGC’s consulting firm CPG Consultants Pte Limited) in July 2013 and adopted by NGC.

10) On 10^th December 2013 (14 weeks after advertisement) the closing date  NGC received two (2) proposals. These sealed documents were recorded and locked away until this Project’s evaluation team requested access on 16^th December 2013.

11) On 16^th December 2013 the evaluation commenced and the Tender Evaluation Report submitted on 17^th January 2013.

12) The Tender Evaluation Report dated 17^th January 2014 was submitted to NGC’s Management Tenders Evaluation Committee (MTEC) on 17th January 2014. Thereafter the Tender Evaluation Report was submitted to NGC’s Board Tenders Committee on 22^nd January 2014 and thereafter to NGC’s Board of Directors on 29^th January 2014.

13) NGC’s Board of Directors considered the Tender Evaluation Report on 6^th February 2014, following which the Project’s evaluation team was asked to provide additional information requested by NGC’s Board Tenders Committee and Board of Directors and submit a Revised Tender Evaluation Report to all levels for approval.

14)  On 14^th February 2014 the Revised Tender Evaluation Report with same date was submitted to NGC’s Management Tenders Evaluation Committee and was recommended to NGC’s Board Tenders Committee for consideration.

15) On 17^th February 2014 NGC’s Board Tenders Committee considered the Revised Tender Evaluation Report and recommended the approval for consideration by NGC’s Board of Directors.

16) On 19^th February 2014 at NGC’s Board of Directors meeting the Revised Tender Evaluation Report dated 14^th February 2014 was considered and approved the award of contracts to the preferred bidder, Super Industrial Services Limited (together with subcontractors of Foster Wheeler USA Corporation and Hyflux International Pte. Limited) who obtained the highest overall score.

17) Letter to preferred bidder was issued 20^th February 2014 and accepted by SISL 21^st February 2014.

18) Letter to unsuccessful tenderer issued 26^th February 2014 to Atlatec.

19) Contract executed 10^th March 2014 by NGC.

Key determining factors for award of tender

A six (6) member cross functional team from within NGC’s group (“the evaluation team”) was convened to evaluate the proposals received. The evaluation team evaluated the proposals received independent of CPG. However, as required clarification and advice were sought where necessary from CPG.

The evaluation team was guided by the predetermined Evaluation Methodology the five (5) stages of which was provided to tenderers in the RFP disclosing the following weightings;

(a)    Quality evaluation (technical) 70%,

(b)   Price evaluation (financial) 30%,

A summary of the main determining factors are as follows:

The following are the main reasons SISL’s (together with subcontractors of Foster Wheeler USA Corporation and Hyflux International Pte. Limited) bid was recommended for the award of contract.

(i)                 SISL scored 77.93% in the technical evaluation (54.55 out of 70.00).

(ii)               SISL complied in main with the plant design proposed in the RFP and actually provided a superior design.

(iii)             SISL proposed a superior pipeline methodology.

(iv)             SISL submitted a superior construction programme.

(v)               SISL information submitted on Reverse Osmosis pumps was of superior quality.

(vi)             SISL proposal has greater local content.

(vii)           SISL design team has extensive membrane plant experience.

(viii)         SISL indicated that only if global steel prices changed they may consider applying for a variation in the contract price. SISL confirmed that EIA and soil conditions risks were considered in their bid. Their bid price can be considered to be firm (apart from variation in world steel prices) having a high degree of confidence and consequently subject to low variability.

The following are the reasons Atlatec’s (together with subcontractor Universal Projects Limited) bid was deemed inferior;

(i)                     ATLATEC scored 52.71% in the technical evaluation (36.90 out of 70.00).

(ii)                   ATLATEC’s deviation in the plant design as proposed in the RFP increased the risks associated with plant maintenance.

(iii)                 ATLATEC failed to provide a detailed pipeline construction methodology even after several requests during their bid clarification exercise.

(iv)                 ATALTEC’s construction programme was not comprehensive.

(v)                   ATLATEC’s overall price was 36% lower than the In-House Estimate significantly increasing the risk of completing the project within the proposed price.

(vi)                 ATLATEC confirmed 3-5% of risk contingency in their price, this is extremely low for a design and build project of this type with the likelihood of several request for variation of the contract price (if awarded) via variation orders and the possibility of increased cost during implementation.

(vii)               ATLATEC identified global steel price increases, variations in the EIA and soil condition risks as factors which would contribute to price increases. In effect, Atlatec has, in fact, signaled its bid price is subject to higher levels of variability resulting in a lower level of confidence in the proposed price.

It should be noted that NGC’s in-house estimate was US$149,999,000.00; Atlatec’s Design and Build  bid price – US$95,224,643.00 and SISL’s Design and Build  bid price US$167,755,329.00 (figures are rounded to the nearest dollar).

Comparison of costs

Conclusion

After considering the determining factors above, the Evaluation team determined that Atlatec’s bid contained significantly below (market value ‘elements’) which are subject to higher levels of variability of their prices. Also, in post bid clarifications Atlatec noted several areas where they may seek to revisit the price submitted for example, changes in global steel prices and soil conditions as previously mentioned in this report.

One of the major ‘elements’ which attributed to the variation in bid prices was the pipeline unit rate per meter (supplied and installed).  NGC’s in-house estimate was USD$1,700/m. This estimate was based on the local industrial rates.

SISL submitted a unit rate USD$1339.72/m.  ATLATEC submitted a unit rate USD$525/m and is below the market price of the pipeline.  This rate was considered extremely low when compared with the in-house estimate and significantly increased the risk of variability.

In conclusion, SISL’s bid package received the highest overall number of points (Technical and Financial) and offers the best technical and financial advantage to NGC. NGC therefore obtained the approval of the Management Tenders Evaluation Committee, the NGC Board Tenders Committee and NGC’s Board of Director’s to award this contract to Super Industrial Services Limited.