Kumul Consolidated Holdings responds to claims published in The National newspaper

Friday February 12, 2016 – The following is a response to claims made in The National newspaper on Friday February 5, 2016 and Tuesday February 9, 2016.

 

Referring to the article “Wharf defects under probe” (The National, Friday February 5, 2016):

  1. It is correct that KCH through its consultant AECOM has identified a defect concerning the integrity of the sea wall slope protection.
  1. The defect was identified within the Defects Liability Period and KCH has addressed the matter with the contractor China Harbour Engineering Company

(CHEC).

  1. An independent international consultant has been engaged and an extensive remediation plan is being developed.
  1. The remediation works will start soon and are in preparation at present.
  1. The remediation works will not affect the normal port operation.
  1. The cost for the remediation works and all other costs related to this matter will be fully borne by CHEC under the Contracts Defects Liability Period.
  1. Not only in PNG, but also around the world, contract works of a magnitude are regularly subject to remediation works.
  1. Therefore a defects liability period is always put in place as part of conditions of contract to cater for those issues. This provides the client with the instrument to solve contractual matters under the contractor’s obligation to make good any defects and matters identified within the liability period.
  1. CHEC has accepted full responsibility and is a willing participant in the remediation process.

 

Referring to the article “Faults delay port work” (The National, Friday February 5, 2016):

  1. The port facility was officially handed over to PNG Ports in April 2015.
  1. PNG PORTS in its capacity as the port operator has carried out an in-depth review of the newly constructed wharf to verify the structural integrity of the port facility prior to start of operation. This forms part of the due diligence process every operator has to undergo to guarantee a safe operational environment.
  1. It is therefore incorrect that structural faults have been the origin of the delayed start of port operations.
  1. After the handover PNG Ports started the International Tender Process to identify suitable bidders for the construction of LAE TIDAL PHASE 2.
  1. A shortlist of bidders has now been nominated and the contract bids will be assessed by a capable and professional Evaluation Committee. The contract will be awarded in accordance with official procurement guidelines for International Tenders.
  1. The construction schedule of Lae Tidal Phase 2 is actually on track and far from being delayed. In a matter further relating to both articles appearing in The National (Friday February 5, 2016), KCH did not give permission, as The National has implied, to reproduce images appearing on page 1 and page 2. The photographs have obviously been lifted from The IPBC Review (July 2015) and are subject to copyright. The infringement of copyright has been brought to the attention of the editor of The National.

 

Referring to the article “Wharf defects raise concern” (The National, Tuesday February 9, 2016):

  1. Korea Engineering Consultants Corporation (KECC) was appointed through the CsTB process by KCH at the beginning of the project to perform supervisory engineering duties under the contract. KECC’s role was to review and approve all designs and construction works.
  1. At the time of appointment, KCH represented through its Project Management Unit in Lae had no reason to question the professional qualities of KECC as the supervising consultant and the adequacy of the inspections carried out on site.
  1. It must be noted that KECC was selected through an International Tender Process and appointed using professional evaluation guidelines.
  1. KECC signed off on all works carried out and consequently issued the Certificate of Substantial Completion (CosC).
  1. The CosC includes a defects liability period of 1 year starting from the date of issuance of the CosC.
  1. Within this period the contractor has to make good at its own cost any identified defects, indemnifying the client of carrying any costs involved.
  1. KECC was not able to identify major defects when important design specifications were not adhered to.
  1. KECC’s performance has been disappointing. It is only through KCH’s intervention that defects were identified and consequently brought to the contractor’s attention. Preparation for the remediation works are now well under way.

 

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