Antigua St. John's - Six and a half months ago, on the 15th of December, 2011, Caribarena was the first to raise the question, did we receive value for money in the Chinese Power Plant? And today, we would like to state conclusively that according to our research, the answer is a definitive no.
In order to understand how and why we arrived at this conclusion, it is important first to understand what is value for money, and how is it determined. According to Cambridge University, Value for Money is defined as, "a term used to assess whether or not an organisation has obtained the maximum benefit from the goods and services it both acquires and provides, within the resources available to it."
1. Economy - careful use of resources to save expense, time or effort.
2. Efficiency - delivering the same level of service for less cost, time or effort.
3. Effectiveness - delivering a better service or getting a better return for the same amount of expense, time or effort."
Following this guideline, Caribarena has compiled a list of 7 reasons why we have not received value for money. These reasons are all based on information coming from APUA, the Government, and our own tour at the Power Plant.
1. Numerous Technical Issues
⁃ Issues with Lube Oil consumption, sinking HFO Storage tanks, fuel mixing in to the lube oil, and more have been constantly plaguing the Power Plant. A new Power Plant may experience occasional issues in one or two of the engines, but issues that at times affect 5 of the 6 engines have a serious blow on its value. These issues were documented in an APUA report released in a prior article (see here).
2. High cost per Megawatt
⁃ A quote Caribarena witnessed for a new Power Plant from MAN Diesel and Turbo cost half a million dollars less per Megawatt of Generating capacity than the Chinese Power Plant. This means that even if the Wadadli Power Plant ran perfectly, it would still be more expensive than new Power Plant engines from Germany. These figures are explained in a prior article (see here).
3. Engines downrated to 4 mW
⁃ Several of the engines have been downrated from 5 Megawatts to 4 Megawatts, meaning they can only generate 80% of the electricity that they were supposed to generate. This means that the abilities, and as such the value, of the affected engines has decreased, without a lessening of the cost to compensate. This was documented in the same APUA report previously mentioned (see here).
4. Engines Constantly Offline
⁃ At one point, 5 of the engines were down. As we speak, 3 of the engines are down. At any time that the engines are down, APUA is losing money because they are not selling electricity. If the engines are down for weeks or months (as is the case), APUA is loosing significant sums of money. If the power plant is not making money, it is not returning on the investment made to purchase it, and as such, the value is significantly decreased. This was confirmed by APUA electricity manager Lyndon Francis and Mechanical engineer Brian Nicholas.
5. Total Sum to be Repaid Constantly Grows
⁃ The RMB is held artificially low by the People's Republic of China. International pressure on the Chinese Government forces China to let the Yuan dollar rise closer to its proper value gradually. The Chinese yuan has been strengthening in relation to the US dollar consistently since 1994. As the yuan continues to appreciate, Antigua will have to pay more and more and more. In 2008, when the loan agreement was signed, 300 Million RMB was equal to roughly 43 million US dollars. Today, it is equivalent to 47 million US dollars. Antigua has received no added value to compensate for this increase in cost. Therefore, we are not receiving value for money, and as the Yuan continues to appreciate, this will only get worse and worse. See here for Chinese to US dollar conversion rates history.
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While it is true that owning an asset is advantageous in some situations, it does not add value to the item when calculating value for money.
Any power plant that the Government or APUA purchased would have been owned by them. It is not a feature or characteristic unique to any plant, and when considering whether the Wadadli Power Plant has provided value for money, the fact that APUA, the Government, or the People own the plant does not increase its monetary value.
If the Government were to attempt to sell the Power Plant, the fact that each engine can produce electricity provides value, but the fact that the Government owned it would not increase the value. Ownership over the plant does provide sentimental value, but it does not increase monetary value.
Furthermore, neither the Government, APUA, nor the People of Antigua and Barbuda own the Wadadli Power Plant. The EXIM Bank of China owns the Power Plant. If tomorrow the Government doesn't or can't pay the loan back to the EXIM Bank, they will take the Power Plant away.
So while APUA maybe operating the Plant, it will be many years before the Power Plant is truly owned by the People of Antigua and Barbuda.
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65 Comments In This Article
Value for money?
Daughter of Klaas
@David Shoulin
ANTIGUAN WOMAN
RE: WPP - No Value for Money
Maybe Antigua can make the money back by conducting some internet gambling in China.
GoodJobBob
Apology?
I think it's time you go back to the USA - where you're a resident, and chill for a while!
Read more: http://www.caribarena.com/antigua/news/latest/100932-wpp-no-value-for-money.html#addcomments#ixzz1z9g3wLXb
David Shaolin
tenman
Skyewill
@Jackie Spence/Lester B
ANTIGUAN WOMAN
@ Antiguan Woman
It would be prudent of you and show a sign of maturity by apologising!
I can say that I have found over my life here that most Antiguans are not as you described!
Lester B
@ Antiguan Woman
Just calm down! No need to be so full of anger! Unless you're carrying a brief for a politician?
Let all ideas contend!
Jackie Spence
@Mr David Shoulin
ANTIGUAN WOMAN
@ Antiguan Woman
How easy for you leave or "move on" whenever you want to? Sounds to me like you have life easy!
I wonder how and where you made your money? Incidentally, this confirms to me that you lacking "soul"!
David Shaolin
FNSPR
ANTIGUAN WOMAN
@ James c
i wonder what the manufacturer's reaction would be to this in another "press conference".
Another "honest mistake", coz screwed on spec tags are "non existent", so another apology to the people of Antigua and Barbuda.or maybe these are really rivets that look like screws.
Personally, I think it's time for some sort of a class action suit(doesn't really exist in Europe) against the mother company MAN Germany. I think, that would spill the beans faster than they could be digested.
down to earth
And the game goes on
Morris
re: jeb
I just read that the PM has met with GB and has “promised” to “consider” the possibility of an inquiry. I will not hold my breath!
The PM is a shrewd individual. I am sure he or his surrogates have read my call for a lawsuit, thus the acquiescence to ‘consider” the inquiry. This is less invasive than a lawsuit. Let’s see how long it takes before the inquiry begins. CA, start the clock running!
I believe that I was one of the first bloggers to call for an independent investigation into the WPP. Shortly, thereafter, MP Bird echoed the same.
“Let’s fix the little things before we attempt to fix the big things.”
fnpsr
@ Eric
Skyewill
Three PPPs...can't change what we got in WPP
It seems that the peoples "money" don't matter anymore! Corruption or any form of it, undermines the fabric of society! If we are not able or willing to fight it, how can "progress" as a society? If there is efforts to block "transparecy," nothing will never change, while the clock keep on going!
Dig It
Skyewill - yes we have been taken
..
tenman
@fnpsr
jeb
@ james c
Skyewill
@ tenman
Skyewill
@ tenman
Skyewill
re antiguan woman
"Let's fix the little things before we attempt to fix the big things."
fnpsr
@ Mr Sabruski
Skyewill
@Milwaukie
Skyewill
merry go round part 2 of 2
..
tenman
RE: WPP - No Value for Money
ANTIGUAN WOMAN
merry go round part 1 of 2
Quote:..
tenman
RE: WPP - No Value for Money
ANTIGUAN WOMAN
RE: WPP - No Value for Money
For generations we accused the ALP of mal-governance, and eventually we voted them out of power. Are we now going to use as justification for our wrong-doing, that "ALP did it too"?
This is why plenty people will have to run out of A&B when the UPP loses power.
DadliMan
re: james - part 2 & final
“Let’s fix the little things before we attempt to fix the big things.”
fnpsr
re: james - part 1
The second option is a timely investigation or inquiry. However, as pragmatist, I believe that this will not happen and even if it were to happen, it would take a long time and the report would probably not see the light of day.
fnpsr
reply to hmmm
others
RE: WPP - No Value for Money
Hmm
finally
james
@ Eric
Vere C. Bird III
to eric
others
to eric
the joker
Oh!
Cool Ruler
RE: WPP - No Value for Money
Eric
RE: WPP - No Value for Money
Eric
where are allof the brilliant attorneys?
I had previously called for news organizations or citizens’ groups to request the information under the FOIA. With the problems inherent in honoring that request, I now believe that it is time to file a lawsuit to determine the truth.
Additionally, I believe that since the equipment was purchased with taxpayers’ money, a suit could be brought immediately for waste, fraud, abuse and mismanagement of taxpayers’ money, claiming lack of value for the money spent, in that the equipment may be used and or refurbished,. This could be supported by the fact that the equipment is constantly down and the monies spent for the maintenance contract and the other myriad of problems.
Where are all of the brilliant attorneys in Antigua?
“Let’s fix the little things before we attempt to fix the big things.”
fnpsr
In response to the Author
Milwaukie
to Underworld
Quote:How are CA "finally" saying what Gaston is saying if Gaston only woke up this month, while CA have been asking this for over 6 months? take ya gaston loving self back home, come back when you cool off.
the joker
Re: Milwaukie
Thank you for your comment! Firstly, I would like to note that we never claimed that APC can run on LNG. However, when the Government purchased the Wadadli Power plant, that should have been one of their top priorities. They should have looked for engines that will be compatible with LNG, instead of bringing down engines that can only burn HFO or Diesel. That's part of the advantage of buying new, you get the latest technology.
With regards to your challenge, our research indicates the WPP cannot be upgraded to LNG. The Wartsilla plant owned by APC has the option of conversion to LNG. So while you are right that at this very moment they cannot burn LNG, they can be upgraded to do so, an option that the WPP does not have.
caribarena author
@ Jackie Spence
Vere C. Bird III
@ THE GODFATHER
DadliMan
prove me wrong.
A car that looks old, consumes excessive lube oil, breaks down every day/week, takes an extraordinarily long time to start and get going, rusty, name plates worn, derated, overheating, can only be a used or old car. An engines in a power plant is no different. It would have been so easy to prove that they are brand new. My last question , can anyone say anything about performance and appearance of those engines that point to the assertion that they are brand new? Party politics really destroying our eyes, minds and consciences. Antiguans arise from your sleep. Please prove me wrong somebody, anybody.
pedro
valid reason
james c
facts!
1) It was Baldwin Spencer who took the Hadeed Group to the then ALP Government to do the Office Complex
2) The ALP brought the Office Complex Agreement to Parliament to be fully debated and voted on
3) Baldwin Spencer voted for the Office Complex Agreement to go through
Jackie Spence
Milwaukie
..
tenman
Why be Bias''
The repayment per square foot is 50% less than your Bencorp at 32m for 8000sq ft.or yor 200m car park .
AT 4.95.ec per sq ft it is cheaper than whats paid to your AMB David and the other cronies!
In fact the Govt will take ownership of the entire complex in 10 year,.You have to pay David rent for life!!!
Martin.
Straw man
..
tenman
Time to go
Time to go.
By the way, who is paying for WPP. APUA or the government?
Mr Sabruski
RE: WPP - No Value for Money
Milwaukie
@THE GODFATHER
Skyewill
Congrats!
This article should have been printed months ago! Then again better late than never!
Underworld
Why?
I have a great deal of concern when we blame the Chinese for the pitfalls of this purchase by Shoul, Baldwin and others!
The fact is when the Chinese offered to assist in purchasing the power plants, the Government of China only agreed to lend the money. The choice and purchase of these "no value for money" generators was done by Shoul, Baldwin and friends.
It is time we take responsibility for the total "screw up" by those persons we trusted to do the right thing.
Shoul was in charge of the Stadium built by the Chinese Government! I remember Tanney Rose talking about cost over runs on the road, no one blamed the Chinese then - as they shouldn't!
What about the exorbitant prices paid for furnishings on Stadium contracts awarded to some?
Time we hold those accountable to task! Stop making the Chinese "scapegoats"!
Jackie Spence
Make up are’u mind nah jack
PLM
BIAS IN CONTENT
For example no mention is ever made of the same private group building various office complexes for government at exorbitant rates, renting the public and still controlling them for ever an ever. Are these the same persons now promoted as good citizens, are clearly bloodsucking, exploiting vampires!
No credit should be given to CA's analysis, since it is bias in content!
THE GODFATHER
Red, Blue & independant?
We need to pack everything back in the box, lok for the receipt, and take that junk back to the store before the 90 days refund policy expire.
Skyewill
NOT IN A DEMOCRACY
Skyewill
the environment
Antiguan
great article
Antiguan
RE: WPP - No Value for Money
Why is it that Antiguans think that they are the only ones who can get away with theft and inferiority as an industry? Give the Chinese a chance, they may even be able to teach Antiguans a thing or two!!
Pellucid
RE: WPP - No Value for Money
Maybe it's time to realize some cost savings by merging APUA and FSRC since they seem equally capable of incompetence!
Pellucid
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