Over $4B in liquidated damages imposed on defaulting contractors – AG

…as Govt continues clampdown on delinquent contractors

Earlier this year, the People’s Progressive Party/Civic (PPP/C) government announced a crackdown on delinquent contractors. As a result, over $4 billion in liquidated damages has been imposed on these contractors.
During his end of year press conference on Saturday, Attorney General Anil Nandlall, SC, who was asked for updates on the government’s efforts to sanction contractors who are in breach of their contracts.
One such sanction is imposing liquidated damages, which is money collected by the government for contractual breaches. According to Nandlall, a number of contractors have been sanctioned and even had their contracts terminated.
“Many have been (sanctioned), but you don’t make these matters public. Dozens of contracts have been terminated. Dozens of contracts have been enforced. I remember the last time I received information.”
“Over $4 Billion of liquidated damages have been imposed on different contractors. From the time the initiative started, I believe in August when I issued that statement,” the Attorney General explained.

The PPP/C Government had announced in April 2024 that a “Contract Compliance Unit” has been established within the Legal Affairs Ministry. Its duty was to tackle corruption and enforce penalties against defaulting contractors as it examines contractual breaches and enforces liquidated damages and other penalties.
President Dr Irfaan Ali had subsequently revealed that approximately $3 billion in charges for liquidated damages have been instituted over delays in public projects across the country. The President made this disclosure during a June 2024 press conference at the State House.
Liquidated damages refer to a provision allowing for the payment of a specified sum in the case of a breach of contract. Based on the value of the contracts, the percentage of the liquidated damage is calculated. This can range from 0.1 per cent up to 10 per cent of the contract sum.
In light of this policy direction, several state agencies had embarked on recovering liquidated damages throughout the year, including the Ministries of Public Works, Housing and Water, and Agriculture which were the main entities with defaulting contractors.
The Public Works Ministry had issued letters to contractors for some 365 projects that have been experiencing unjustified delays. According to Public Works Minister, Juan Edghill, the liquidated damages sought from these contractors amounted to a staggering $934.65 million.
Edghill had also explained that the liquidated damages formula on these contracts ranges from 0.25 per cent up to per cent. Avinash Construction and Metal Works, which at one point was executing the controversial $475 million Cemetery Road Expansion project, was one.
The Government had also moved to terminate its contract with Trinidadian company, Kalco Guyana Incorporated, which had abandoned its works on sections of the Conversation Tree Road Expansion Project.
During a June 6 press conference, Vice President Dr Bharrat Jagdeo had also explained that as part of their contracts, contractors are required to put up a performance bond that the State can draw down on should they fail to complete their work on time or at all.
These performance bonds are often issued by commercial banks and insurance companies. As such, in addition to contractors, the Vice President is also putting these financial institutions on notice that the Government intends to levy on these performance bonds.
“So, I want to urge the banks and the insurance companies too that if you’re giving a performance bond, you better make sure that your client is doing the work too because, at the end of the day, we will come against the bond that you have issued. And therefore, the insurance company or the bank will be called upon to perform and because we will draw down on the bond from them.”
“And so, I hope that they are also paying keen attention to this matter because sometimes they think that the issuance of these performance bonds is risk-free. But if your client doesn’t perform then the state has every intention of calling in the bond, and we’re doing this with greater frequency now,” Jagdeo had noted.
The vice president had indicated that clear instructions had already been passed to all ministries and state agencies to look into cashing in the performance bonds. According to Jagdeo, in the past, there was a “lax view” in instituting liquidated damages against contractors who had not completed their work within the contractual timeline – something that will no longer be obtained. (G3)