The botched Brazil to Georgetown Fibre Optic cable that government boasted will be an integral part of its E-governance services will now effectively be handed over to a private contractor.
The agreement was flayed yesterday by the Working People’s Alliance (WPA) which accused government of consigning control for free of all of the assets of the project and a 40-year monopoly licence to a “nothing company”.
Government recently revealed that an agreement had been reached with Dax Engineering on March 18, 2015, amid deep concerns over the flawed cable, on which it had already expended over $1B.
Chief Executive Officer of Dax Engineering Company, Faisal Mohammed, recently told Stabroek News that the rehabilitation would cost “somewhere about US$10M”. When contacted yesterday by Stabroek News on the WPA statement and the terms of the agreement with the government he declined further comment.
Head of the Presidential Secretariat Dr. Roger Luncheon told Stabroek News on April 26 that under the agreement for the repairs, the contractor, Dax Engineering, will be given a number of pairs of fibres in that cable for its own use. The cable has 12 pairs of fibres.
He said that the specific number of pairs that Dax would be given had not yet been finalized but said that experts had explained to the government that for its E-Governance project they would not utilize more than “one or two pairs for a long, long time to come”.
“The most generous estimate of bandwidth demand for Guyana in the medium term did not require retention of the total capacity of the cable, keeping in mind the capacity being provided by others in the sector,” he stated. Luncheon’s statement would raise the question of why the government would then seek to be involved in a cable of this capacity.
The contract also states that in addition to the maintenance of the cable, repeater stations and other equipment would also be maintained by Dax.
However maintenance costs would be shared by government and this aspect of the agreement was bemoaned by a communication consultant who opined this is where the project seems to be “a giveaway”.
“They (government) have not even given a ball park figure of how much maintenance cost is estimated to be for one year. This is suspicious because you are saying to a company ‘I will allow you to maintain for me for X amount, I don’t know what X is so you go find the value for X and tell me and that’s it, you have it.’ What nonsense! It can be another $1B a year and they have no say,” the observer said.
“He is investing, he says US$10M okay. Common sense will tell you no business goes into investment for a loss so right away this deal is a giveaway. You put in your US$10M and you get must be five pairs to do what you want, from money taxpayers paid to get the project to a point already, and still getting more . That alone is more than what you put in but this company is getting equipment to execute a project of his own and plus we are paying him for the next 25 years,” he added.
The project to lay a fibre-optic cable from Brazil to Georgetown to vastly expand internet bandwidth, came back into sharp focus last December when Stabroek News reported that government officials had gone quiet on the project which had missed many deadlines.
Subsequently, Luncheon acknowledged that the project needed “remedial work” but failed to mention that it had been suspended. That announcement was made quietly in the December 12, 2014 edition of the Guyana Times by the Project Manager Alexei Ramotar, the son of President Donald Ramotar, who had not been available to Stabroek News for several weeks to discuss the state of the project.
Then on April 15th of this year Luncheon was again asked by this newspaper about the project and then informed that rehabilitative works had begun.
“I am happy to say that an arrangement has been put in place to have works commence on its rehab and as I sit here, I do have some of the most initial reports of the progress being made in the rehabilitative efforts by this consortium, seeking to restore the fibre optic cable to its original design and indeed its purpose, that is from transmission of bandwidth from Brazil to Castellani (House) in Georgetown,” Luncheon said.
Mohammed subsequently told Stabroek News that the project would cost about US$10 million but he directed questions as to the details of the financing and agreement to the Head of the Presidential Secretariat.
Project Director Ramotar also told this newspaper that all answers to the project would come from the HPS but that no state funds would be used to pay for the rehab works. “All I will say is not a cent of government money will be used,” he stated.
Luncheon on April 20th told Stabroek News that according to an assessment, the cable was about 40% damaged and one quote given to government by a company to salvage the project was in excess of US$28 million.
Dax, he informed, had approached government last year to undertake the rehabilitation works and this year they were called in to commence negotiations.
Details of the agreement reached in March of this year state that government would not have to stand any of the costs for the rehabilitation process but would supply Dax with a number of cables for its own use and Dax will also maintain the cable for a 25-year duration, subject to a further 15 year renewal.
“The cable is government-owned and the agreement restricts access to the two parties so is only we and Dax in this cable. So it’s government and Dax and Dax has an exclusive arrangement with us nobody, anybody else,” Luncheon said.
However, the WPA believes that the contract is a “gift” to Dax and says it’s a small company with capitalization of $7,000 and called the 40-year contract an outrage, urging it be cancelled immediately. The party says that assets acquired, with the monies spent thus far on the project by government, such as radio equipment, antennae and equipment to set up towers and communication posts across the country, had not been valued before the transfer of the project to Dax. As such there is no way to know, in dollar figure amounts, how much Dax is really getting out of the project.
The WPA also made reference to a story Stabroek News broke on Monday which stated that Luncheon revealed that E-Networks, owned by Vishok Persaud, who is the son of the late PPP/C executive and Minister Reepu Daman Persaud, was also given permission to land a fibre optic cable here from Brazil.
Since Luncheon’s announcement last week Stabroek News has been trying to reach Persaud who after once saying he would get back to the reporter has since not been available to this newspaper.
Coming just days before the May 11th general elections, the decision will raise eyebrows in the cable TV and communications sectors and the WPA said that it was a flawed one on the part of the Donald Ramotar administration.
The HPS on April 27th informed Stabroek News that it was last week that the approval for E-Networks was granted. He said that the specific elements of E-Networks’ intended investment was not exchanged with OP but that more bandwidth was OP’s expressed aim in giving the approval.
The government has been accused of favouring E-Networks among other providers in the cable business.
The government agreement with Dax also says Dax will be provided with applicable tax holidays, applicable remissions, applicable waivers and duty-free concessions on the importation of equipment, spares, tools and vehicles.
Dax would also be free to enter into a joint venture agreement with any other company or entity so as to execute the agreement.
Anticipating possible problems in the deal, the agreement said that Dax Contracting “will fully and timely support the Government of Guyana in any response that the Government of Guyana has to legally undertake in the likelihood of intervention by GT&T/ATN with regards to the granting and use of the Operator Licence”. GT&T has a monopoly for a range of services in the communication sector.
It further says that Dax Contracting fully and willingly accepts the risks involved in accepting and using an Operator Licence prior to the enactment of the applicable legislation.
