Heavy Oil project collapsing under its own weight

La'o Hamutuk recently obtained the January 2011 report from the Italian company  overseeing the $900 million national electricity project, and we have added its information to our web page on this project, which contains background and context, as does our blog entry late last year. This project will use 3/4 of the $599 million allocated to Infrastructure Fund for 2011.

The January report portrays a drastic deterioration in the quality of the work, although the pace has picked up slightly. A contract was signed with the Indonesian company Tehate for the Liquica-Maliana-Suai-Cassa-Betano part of the grid, after negotiations with DCP fell through. Wärtsilä has begun work, and invited EDTL to send people to Finland and Italy in March to observe factory testing of the first three generator sets. The number of Timorese workers on the project has dropped to 331, along with 591 workers from China.

 Here are a few quotes from the report:

• "[EDTL] was disappointed during the visit made in Dili substation on January 20th to see the site in a state of neglect."
• "with the present trend we believe that the Contractor is not able to meet the completion dates given to H.E. the Prime Minister."
• "From Liquica substation up to Lospalos substation ... no substantial progress is visible. The number of towers in this north part of the Power Grid is 554, at the end of January a total of 249 towers were erected, but many of them have missing pieces, are incomplete and require additional time to make an overhaul."
• "The situation which seemed had improved as far as the quantity of the work is concerned had been badly darkened and affected by the quality of the workmanship. A lot of reparation works are required and therefore towers can not be considered completed."
• "The Contractor is invited once again to take action on the issue of the Timorese workers to be trained as tower erectors."
• "The conductors strung in the section of 10 towers in Hera-Manatuto has been heavily damaged and must be dismantled and done it again."
• The heavily deterioration of the quality of the workmanship in the transmission line, the tower erection and the stringing of the conductors are carried out in a manner which do not have a proper word to be described — ghastly — horrible, the photos produced as evidence of the quality of the work show that workers are not at all qualified rather they are common labourer. The Contractor is warned that all the towers with defects and conductors damaged will not be paid for till all adequate reparation is carried out. The Consultant had shown a lot of tolerance collaborating in order to have the work done fast, but there is a limit to be tolerant .... Those workers responsible of this situation are incompetent and should be sent back to China and replaced.
• "Attending this meeting [two weeks later] are also the Leaders of all the Tower Erectors Teams (previously requested by the Consultant) to give them a strong warning that if they continue to produce such disgusting quality of the works all of them will be dismissed and sent back to China. The photos produced as evidence left them astonished. We hope that the lesson taught them something. The Contractor is warned for the last time that drastic measures will be adopted."
• "Pollution and environmental problem. Once more the Contractor is reprimanded for the fact that in the weekly report it is mentioned that is taking good care of the situation, but in the reality it is a mess in every working place.
  Yesterday the sea side and the beach in Dili were scattered with hundreds of pieces of red plastic sheets used to wrap up the steel structures bundles for protection during transportation, so it means that in Hera-Manatuto-Baucau all the waste are dumped in the sea and from there the current transported all these polluting waste up to Dili. Fisherman made a lot of complains for the fishing area polluted and all these plastic trapped in the fishing nets.
  CNI22 does not make a good reputation of itself."
• Two weeks later, CNI22 objected: "The Contractor considers the statement made by the Consultant exaggerated, but it is not because photos are there as evidence and fishermen can be questioned all the time."
• "The Contractor in the weekly reports always states that is taking good care of the [environment] situation keeping all the places clean and under control, but in the reality it is not like that, nothing or very little is being done concerning the protection of the environment."
• CNI22 and EB pointed fingers at each other about approval of drawings for transmission line materials, with EB calling CNI22's claim that EB is holding up purchasing by failing to sign off on drawings "totally groundless."
• "The Consultant reminded once more that the quality of finishing works [at Dili substation] must be improved. ... In the 20Kv building the concrete floor done is not in accordance to the drawing and must be demolished and removed."
• "Unprofessional handling of the materials during loading, unloading and transporting from the year to the site that causes minor to heavy damages of the materials."
• "Coordination to local residents around the work sites is not properly handled."

The January report reiterates concerns in previous reports about worker safety, health, housing, pollution, littering, sanitary facilities, lack of required permits, and failure to report or monitor environmental issues. "To date, [CNI22] has yet to commence the implementation of the [March 2010] Environmental Management and Monitoring Plan."

The Government's oversight of the project is lackadaisical, with only a few EDTL representatives attending project meetings. Although "by instruction of the Prime Minister, no compensation should be paid for the land," several land disputes have been left to the companies to work out. CNI22 blames EDTL for delays in clearing material through the port and customs, although ELC/Bonifica says it is the forwarding agent's fault.

Nevertheless, $90 million of Timor-Leste's money was spent on this project during 2010, $447 million more is allocated for 2011, with more than $370 million to follow. The EDTL project manager pointed out that Timor-Leste's National Parliament, by enacting the 2011 state budget, has "announced officially that the project will be completed within the year 2011, is CNI22 in the position to guarantee this time schedule?"