Feb 14, 2017 News
In a response to an article published in the February 12, last, edition of Kaieteur News, Smart City Solutions has tried to discredit the factual reporting of this media entity.
SCS in an official statement contended that this news agency incorrectly reported on the contents of the original contract, that the document was substantially and fundamentally amended.
This newspaper reported on the contents of the original contract. Additionally, it must be noted that there is no proof of an amended contract except for snippets of what were to be amendments to the contract in a newspaper advertisement.
The company also contends that disclosure of the contract was prevented by the inclusion of confidentiality clauses.
In fact, the word ‘confidential’ was only used once and this is regarding Key Platform and Operating Standards in Article Five of the agreement as follows: “Any financial or otherwise sensitive information provided by the Concessionaire to the City as part of the Key Platform Features and Operating Standards shall be kept strictly confidential by the City.”
The company in its response stated that confidentiality clauses preventing disclosure are common business practice everywhere in the world where large investments are involved. This is surprising since on a number of occasions the media was informed that to view the contract persons would have to visit the office of the Town Clerk Royston King.
Since this offer was made to the entire country, it would follow that City Hall facilitated public disclosure of the contract.
Further, SCS said that the contract was made available for review by the Attorney General’s office and the Ministry of Finance, both of which concluded that the contract was legal, valid and binding. However, the company failed to mention what was said in both reviews.
The Attorney General’s chambers had called the contract ‘onerous’ while the Ministry of Finance had said that one risk is that the Government may find after closer study of the feasibility study and legal review is that the arrangement disadvantages the people of Guyana relative to potential quality of service and rights of the public.
The Finance Ministry’s review went on to say that the company has no risks except that its applications for concessions may not be granted and that its present arrangement of a monopoly allows it to pass on the costs imposed on it via taxes to the public.
It was also observed that the government procurement requirements may have been violated, in that a tender was not advertised and bids reviewed for acceptance based on certain criteria and as such justifies a revoking of the contract by government and the re-tendering.
Another important point made by the Ministry is that the contract has given complete monopoly power to SCS over parking within Georgetown which could lead to the exploitation of consumers.
Despite SCS saying that the contract is legal, the Ministry said that subject to legal implications, there are grounds for the contract to be withdrawn.
On another note, SCS said that according to the World Bank, a typical concession agreement lasts for 25 to 30 years. Knowing this, the company should then explain why in the initial stages the contract had even been for 49 years.
The company contended that this newspaper erred in saying that the onus is on the M&CC to ‘facilitate’ tax exemptions to be awarded to the company. SCS interpreted this to mean that Kaieteur News was saying that the M&CC is to award concessions to the company.
However, SCS failed to interpret the term ‘facilitate’ properly which means to enable or assist.
The company in its response provided a ball-park figure of the cost for the project estimated at US$10M. Based on the supposed amendments, if M&CC chooses to terminate the contract unilaterally it has to pay SCS US$10M plus 15 per cent of that sum multiplied by the remaining number of years under the agreement.
Since 15 per cent of the total is US$1.5M and multiplied by 19 years totals US$28.5M. When this is added to the investment cost, the new sum would be US$38.5 million. Since City Hall had applied for a $600M bail out in November 2016, the council might be hard pressed to even think about withdrawing from the contract which has been described as a “Sweet Heart Deal”.
The contract can be viewed at: https://www.kaieteurnewsonline.com/2017/02/13/georgetown-metered-parking-system-concession-agreement/
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