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May 05, 2015 Features / Columnists, Peeping Tom
Moses and company are correct. There are fundamental flaws in the contract signed between the Government of Guyana and DAX, in relation to the rehabilitation of the ICT cable.
Indeed, a strong argument can be made that the agreement itself lacks one of the principal elements of any contract: consideration.
Unlike what one legal luminary is contending, the provision of fiscal incentives to the company does not constitute consideration. These incentives are not being provided to underwrite the provision of services. They are incentives intended to facilitate the agreement but they do not constitute the element of consideration.
If you carefully read the wording of the contract you will appreciate that the rights given to DAX to use the cable do not constitute consideration for the rehabilitation- remedial and maintenance- works that have to be undertaken.
The government may well have intended for the contractor to be paid for his services via usage and rights to the cable, but the language of the agreement does not suggest that these rights of uses of the cable constitutes consideration for the services that are to be provided.
The issue of consideration is so vague that the contractor is likely to find serious difficulties in securing a Joint Venture partner to allow for the contractor to be able to benefit from rights to usage of the cable. No joint venture partner is likely to commit to such a vaguely worded contract.
Neither should anyone fear that ownership of the cable will be handed over to the contractor. In fact, if there is anything about which the contract is not vague it is on the question of ownership. The agreement makes it clear that government retains ownership of the cable.
This may seem perplexing but it is not. It is rather like someone owning a piece of land but lacking the funds to pave the said land. So the owner enters into an agreement with a wash bay service to use the property for washing cars. The wash bay company is free to enter into an agreement with a third party to provide car washing services on the property. But the ownership of the property does not change. The property still belongs to the owners.
It is a similar arrangement with the ICT cable. The contractor is required to repair and maintain the cable. He can use the cable to provide services, but the cable itself belongs to the people. Ownership has not been handed over to anyone. What has been handed over is the usage of the cable.
But the contract is so loosely worded that one does not know whether the contractor has full rights to the cable or whether these rights are limited.
In this context, one has to question why the PPPC would write such a contract that is liable to be challenged on so many grounds. Why would the government not have indicated the scope of works and the actual work to be done?
It cannot be that the PPPC lacks negotiating skills or cannot draw up a valid contract. This is the same PPPC that has been able to draw up a contract for the construction of the Marriott Hotel and for the branding of that hotel.
The government therefore clearly has the capacity to draw up a proper contract. Why then would it make such a questionable contract for the rehabilitation of the ICT cable and the granting of rights to the contractor?
I want to suggest that this agreement is merely a form of insurance that the PPPC is taking just in case it loses the election. I do not believe that the PPP will lose the elections.
Indeed it seems as if they are going to win the elections. But no chances are being taken and what the agreement could represent is a form of insurance.
If by chance the PPPC loses, the new government will try to annul the contract and even go as far as not proceeding any further with this cable.
This would be a major blow to the oligarchs who are interested in securing rights to this cable so that they can be able to monopolize a wide range of services, including telephone services.
It is therefore my suspicion that what the government has done is to assign tenuous rights to the contractor who has to rehabilitate the cable. If a new government gets in, that new government will move to rescind the contract.
There will however be a legal challenge by those to whom the rights are assigned. Those holding the rights will sue for deprivation of property. The case will take in excess of five years.
In the meantime, fresh elections can be held, and who knows the PPPC can be returned.
There is no way that the PPPC is going to hand over ownership and full control of this cable to contractor. The contractor is not a member of the powerful economic oligarchy in whose interests these projects are designed.
When it suits the PPP, it will privatize the cable to one of its cronies.
By the way, this is yet another example of something that the opposition parties did not see coming. The PPPC remains as always one step ahead of the opposition.
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