Sen. Francis Heyliger digests Inspector General VITOL Report: “disgusting, dysfunctional, lacking accountability”

US VIRGIN ISLANDS – On November 19, 2021, the United States Virgin Islands Office of the Inspector General created a document entitled “Inspection of the WAPA-VITOL Fuel Contracting Process and Transactions”. Subsequently the document was released to the public that left lawmakers, residents and the general public disgusted and wanting to hold individuals accountable.

Senator Alma Francis Heyliger, a freshman senator in the 34th Legislature of the Virgin Islands expressed her disapproval of the practices at the utility. “I took my time to review the report in its entirety,” Francis Heyliger expressed. “It is clear to me that this situation exposes dysfunctionality, incompetency or outright deception directed to the pocketbooks and wallets to the people of the Virgin Islands. These are the same individuals that gave me the job to represent them and that is what I am going to do with all my being. Someone must be held accountability to what was revealed.”

The report highlighted four specific findings: project planning, project cost, WAPA procurement guidelines, and conversion of power-generating units.

Project Planning

The Office of the Inspector General found the WAPA’s Board and management did not fully exercise due diligence in undertaking the Project Specifically, after WAPA officials researched the viable options available to address the energy crisis and procured the contractor for the Project, the Board and management focused primarily on the progress of the Project’s construction and less on its cost. In addition, the Board, the Board did not ensure that it mitigated WAPA’s financial risk when they approved the Project without detailed engineering plans. Instead, they allowed a design and construct as-you-go project. Also, they did not ensure that a cost-benefit analysis was done to routinely assess if and when the Project’s cost started to negatively affect its benefit.

As a result, WAPA’s $160 million project cost far exceeded the expectations of its Board member. “What this finding says to me crystal clear is that there was no proper planning,” Francis Heyliger acknowledged. “The Board failed to do its job and that is why when it comes to Boards and Commissions appointments I do my due diligence and take that function of my job very serious.”

Project Cost

The Office of the Inspector General found that although WAPA’s Board ultimately approved the $160 million Project cost, WAPA’s management:

1. Did not timely notify its Board as the Project’s cost went from $87 million to $150 million.

2. Management approved the building of a $2.2 million truck rack system, unknown to its Board.

In addition, other contractual obligations and untimely infrastructure cost payments contributed to the total Project cost increase. These conditions occurred because the WAPA Board:

1. Placed unfettered reliance on its management.

2. Did not ensure that management routinely apprised the Board of the increased Project cost.

3. Did not ensure that, as the Project progressed, the Project’s cost was monitored for necessity, reasonableness, and affordability.

As a result, the Board member expressed frustration as the cost exceeded $150 million and settled at $160 million. Consequently, the Project’s original contract has seen three amendments as of September 2020, and the total Project cost has exceeded $200 million.

“I can see and understand why the public looks at WAPA as a place of corruption activity,” the Lawmaker said. “I have never seen an entity budget to complete something at $87 million get to $160 million and ultimately exceeding $200 million. It is a difficult equation to comprehend.”

WAPA PROCUREMENT GUIDELINES

The inspection revealed that:

1. The procedures were not always adhered to regarding Vitol’s NOOT agreement with WAPA.

2. WAPA’s involvement in the contract negotiation lacked transparency.

3. WAPA officials created an apparent conflict of interest when a law firm used by WAPA also performed services for Vitol.

These conditions occurred because:

1. After WAPA agreed to the terms of the BOOT agreement, they dismissed their procurement and processing guidelines that govern contracts and change orders.

2. WAPA’s legal counsel held that not all contracts are boiler plate; therefore, all contracts do not have to go through the same process.

3. WAPA did not ensure favorable “standard contract terms” found in WAPA’s written contracts were included in the BOOT contract.

4. Other contract terms WAPA agreed to placed WAPA in a tenable or precarious position if they did not agree to changes Vitol deemed necessary.

5. WAPA did not vet its external legal consultant for possible conflict of interest.

Inspectors found that WAPA converted five of eight power-generating units they initially planned to convert to use Liquid Propane Gas (LPG). Of the five converted, WAPA dismantled one unit and removed another from service, replacing them with rented units. WAPA did not ensure that some rented power units burned LPG as stipulated in the rental agreements. WAPA officials had differing opinions on whether the dismantled unit should have been replaced or repaired.

These conditions occurred because:

1. Of the seven units contracted, one was not overhauled and therefore, not eligible for conversion.

2. Another unit experienced mechanical issues during conversion and was abandoned and is now used for spare parts..

3. Another unit sustained damages after conversion and was deemed unusable.

4. Another unit failed after conversion.

5. WAPA officials decided to replace the damaged unit with rented units without doing a cost benefit analysis to repair versus replace the unit.

As a result:

1. WAPA was left with three out of five converted units to burn LPG.

2. WAPA incurred $43,570,000 in rental costs and increased fuel costs when some rented power generating units could not burn LPG.

3. WAPA’s ability to recoup its estimated investment of $10 million to convert two units was negatively impacted when on unit was dismantled and another unit failed.

The scathing Inspector General report has left the community in shock about the revelations of the report. Virgin Islanders now an get a clear picture of why we have the highest utility cost in the US and the neighboring islands in the Caribbean. It seems that relief will be a long way out.