LET’S LECTURE: What Happened to the LPRC Tank Farm Rehabilitation?

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At the end of March 2009, a contract was signed between the Liberia Petroleum Refining Company (LPRC) and Zakhem International, a UK construction company, for the rehabilitation of LPRC’s tank farm on Bushrod Island. Zakhem had beaten out another UK company, Motherwell Bridge, based in Glasgow, Scotland, which had pulled out of the contest at the very last minute because its banker, the Royal Bank of Scotland, had posted a US$20 billion loss and had to be rescued by the British government.

In the first round of bidding, Motherwell had bidded an amount that was US$12 million more than Zakhem. Motherwell’s sponsor was a close family friend. So, I had recused myself from the evaluation process. The LPRC bid evaluation committee, headed by the then-Deputy Managing Director, T. Nelson Williams, had recommended to me that Zakhem be awarded the contract. I passed his recommendation on to LPRC’s board of directors and the contract with Zakhem was signed in a public ceremony at Krystal Oceanview Hotel, attended by members of the Legislature, Executive branch, the press and other stakeholders.

The Zakhem contract was to have run for 3 years. We had negotiated tough conditions: the company was required to put up a performance bond equal to 25% of the US$24.7 million contract price (unheard of in this country), and was to receive only 2% of that price as mobilization fee. We wanted the winning candidate to bring their own money to the table, rather than using ours. They would do work, the work would be certified by our project supervisor, then they would get paid. That way they would always have a stake in the game, which we felt would be a deterrent to their walking off the job.

Before the contract got underway, however, I was fired and the contract awarded by default to Motherwell. If Zakhem had been allowed to perform, LPRC would have had a spanking new, state-of-the-art terminal by the end of March 2012. It is now October 2015, six and one-half years later. LPRC’s tank farm is nowhere near completion and the project is likely to incur a US$10 million cost overrun at best.

Last year, Motherwell’s contract was cancelled, but not before they were paid US$11 million for the work they did. But I am told that the remaining work to be done to complete the rehabilitation is about US$24 million. If one adds this amount to the US$11 million that Motherwell was paid, the new total is $35 million, i.e. US$10 million more than Zakhem would have charged. One of the reasons cited by then-Deputy Minister of State Morris Saytumah for taking the contract away from Zakhem and giving it to Motherwell was that it would be cheaper. What is now-Senator Saytumah saying now? What went wrong?

Let us deal first with the financial shenanigans that were carried on. Motherwell dropped its US$41 million bid price in the first round of bidding to US$25 million in order to get the contract after Zakhem was booted out. I was always of the opinion that Motherwell would never settle for doing the contract for that price, that it would try to recoup some of that money through change orders. Indeed, on the day the contract was signed, Motherwell put in for its first change order.

Also, the new LPRC management reduced the bid security dramatically and started handing out large sums of money to Motherwell ahead of construction. Cllr. Negbalee Warner, who took over as chairman of LPRC’s board after Dr. Amelia Ward, was very unhappy with what he saw happening. He complained to President Sirleaf about the irregularities he observed with the way Managing Director T. Nelson Williams was executing the contract. President Sirleaf did not take any action. So, rather than have his good name associated with what he saw as an impending train wreck, he resigned.

Today, LPRC’s board is chaired by The Right Reverend Herman Brown, dean of Trinity Cathedral. Rev. Brown is a good man, a pious man, a man of great ecclesiastical erudition. In matters of Episcopal doctrine, I have absolutely no doubt that Dean Brown can hold his own with the best of them. But LPRC is not the church. It is a business, an organization whose currency is financial statements—-balance sheets, profit and loss statements, cash flows. Imagine the brouhaha that would erupt on Wall Street were we to wake up one morning to the news that British Petroleum’s board of directors was to be chaired by the Bishop of York!

President Sirleaf needs to find out where all of that money that has been spent on LPRC’s tank farm rehabilitation has gone and why more than 6 years after the fact the job is still nowhere near completion. If she does not want to know what happened, my guess is that the next President will certainly want to know.

The writer is a certified public accountant and a businessman. He can be reached at ([email protected])

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