Thursday, 15 December 2011 02:30
By caribarena news
Antigua St John's - MP Robin Yearwood raised some troubling concerns about the price of the new Crabbs Power Plant during Tuesday's Parliamentary session.
The plant was paid for by the Export-Import Bank of China through a concessional loan to Antigua & Barbuda, which must pay back a total of US$47 M ($300 M yuan), not including additional management fees and interest.
The contract for the power plant was given to a Chinese company, Beijing Construction Engineering Group Co Ltd. From there, Beijing Construction hired a contractor named XMEA (Xi'an Marine Equipment Engineering Research Academy), which supplied the engines for the power plant and other equipment.
APUA is the client and final receiver of the power plant. The Concessional Loan Agreement for the Expansion of APUA and the construction of the Crabbs power plant was signed on June 26, 2008. The catch is that XMEA's first shareholder meeting was held on June 25, 2008, and the unveiling ceremony of the XMEA was held on August 28, 2008. The company that Antigua's power plant relies on was not even open when the contract was signed.
However, even more interesting is a document titled "XMEA Undertaken Export Power Plant Project,"
which is publicly available on the XMEA website. This document states, "Last year, XMEA undertook a government-aided Antigua and Barbuda 6x5000kw Power Plant project with a contract value of RMB147 M." $147 million yuan is the equivalent of US$23 M.
This begs the question, why is Antigua paying back US$47 M? In his speech yesterday, MP Yearwood also questioned this price. After his statement, Caribarena investigated and discovered that power plants that deliver similar or greater amounts of electricity (within the vicinity of 30 - 40 megawatts) typically cost US$18-25 M, including overseas shipment. So again, why is Antigua paying US$47 M for a US$23 M power plant? The answer may lie in a deeper analysis of exactly what happened between Antigua and Beijing Construction.
Antigua has worked with Beijing Construction in the past. In 2006-2007, the company was responsible for the construction of the Sir Vivian Richards Cricket Stadium. So when the power plant project was proposed, Beijing Construction was the obvious candidate. Through Antigua's ambassador to China, David Shoul, a loan was secured for US$47 M from the Export-Import Bank of China. This also means that Beijing Construction received US$47 M ($300 M yuan) from the Export-Import Bank of China.
Some of these funds were allocated for the engines and equipment, which were provided by XMEA. As stated earlier, XMEA received US$23 M for its services, which means that Beijing Construction was left with US$24 M. A rough estimate of the total cost of constructing the power plant, not including the engines and equipment, is US$5-6 M, which still leaves US$18-19 M up in the air.
However, this discussion of pricing would be irrelevant if Antigua received value for its money. Which prompts the question, just how good is Antigua's "brand new" power plant.
There have been several allegations that the engines used in the power plant are not new. Our investigation revealed that the engines are SXD-MAN B&W 12V3240. These engines have a plate embedded into the block to identify the model, the year, and the serial code of the specific engine. Caribarena has formally requested access to the power plant from the government to verify the information printed on the plates.
In the 1980s and 1990s, MAN Germany signed multiple contracts with Chinese companies, and granted licenses for the manufacturing and maintenance of MAN Engines in China. Many engines were shipped during this period from Germany to China. However, the lowering popularity of HFO fuel resulted in many of these engines being discarded. Since then, China has become popular for selling these older HFO engines globally. The engine models seen in Antigua could be one of those originally shipped to China between 30 and 20 years ago.
This would also support MP Yearwood's statement regarding the inefficiency of the new Chinese power plant when compared to the APC plant. As an engine ages, its fuel efficiency decreases, while maintenance costs increase. Below are some images of the engines in the Crabbs power plant. These are publicly available on the government's website.
Regardless of anything said above, Antigua is now locked in a vice grip through the concessional loan agreement. The agreement ensures that any legal affairs must be settled in China, and according to Chinese law, if "friendly consultation" does not resolve the disagreement, each party will be able to submit the dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”). CIETAC will have the final say in the arbitration. And if that wasn't enough, Antigua irrevocably waived any and all immunity that it or its property has or may possess in the future.
Caribarena's investigation into the matter is ongoing. We contacted MAN's head office in Germany, and requested assistance in identifying the engines used in the power plant. MAN Germany has replied, and are currently awaiting the serial numbers of the engines. We also contacted SXD in China, which may have originally manufactured the engines, but we did not receive any response. Caribarena will continue updating our readers on this matter as our investigation continues.