Govt defends fibre-optic cable deal with Dax Contracting Services

Last Updated on Wednesday, 29 April 2015, 18:44 by GxMedia

The Guyana government on Wednesday defended handing over the rehabilitation and maintenance of the state-owned fibre-optic cable to a local private company for free, saying that it was much cost effective to do so rather than borrow between US$20 million to US$30 million to first fix it.

That is in stark contrast to the US$10 million that a senior official of Dax Contracting Services has said it would cost to rehabilitate the cable which is to be used to transmit data for government’s E-Governance System.

Head of the Presidential Secretariat, Dr. Roger Luncheon told reporters that there was no need to invite bids to find a company because the aim of government was to find an entity to do so without having to spend money. “Do you need public tendering if you don’t have to pay? That’s the bottom-line!”.

In turn, Luncheon said government would be providing several of the 12 pairs of cable to Dax Contracting Services but that company would not be allowed to provide telecommunication services.

Government, he said, has so far spent US$4.5 million on laying the now botched cable from Lethem through the vast rugged interior terrain to Georgetown.

Just prior to releasing copies of the agreement between government and Dax Contracting Services Limited to rehabilitate large sections of government’s E-Governance backbone, he told reporters that it was much more cost-effective to have Dax Contracting Service rehabilitate and maintain the cable for the next 25 years instead of borrowing and repaying US$30 million with interest.

“If you ask me keeping the 20 to 30 million to rehabilitate this cable, I am not certain that this 25 years is unreasonable. When you think about amortizing 25 to 30 million, let’s say even at 10 percent per annum, you have to pay US$3 million per year. Think about amortizing and then you will see that 25 wasn’t so bad,” he told Demerara Waves Online News.

Asked why the agreement commits Dax Contracting Services to enjoin government in any legal action that the United States-headquartered Atlantic Tele Network (ATN) and its subsidiary Guyana Telephone and Telegraph Company (GT&T), he said that was necessary because the local telecommunications provider maintains that it has monopoly. “I don’t believe that you are unaware that GT&T insists that it has a monopoly not only on voice but on data…so all I am preserving is the government’s freedom and saying to Dax ‘if I touch base with you in this area, you better line up behind me and prepare to support the administration in any possible engagement with GT&T or ATN,” he said.

He brushed aside concerns by the Working People’s Alliance (WPA) that government has given away the cable for free and described that political party as a “discredited, decrepit and defunct” organisation.

In the deal that would see Dax rehabilitating the cable from Lethem to Georgetown to international internet transmission standards, the company would be allowed to use and maintain the said fibre optic cable repeater stations and equipment for a period of 25 years from March 16, 2015 with the option of renewal for an additional 15 years.

The only time the government would provide direct financing is if there is an emergency, but this has to be in keeping with the huge tax concessions on equipment, spares and tools that will be granted to company. The exemptions include but not limited to tax holidays, remissions, waivers, duty-free concessions on the importation of equipment, spares, tools and two SUVs and three four-door pickups.

The agreement states that government will provide Dax Constructing Services with licenses to transmit and receive data via the fibre optic cable; access and use the Government of  Guyana-owned fibre-optic structure equipment including road access, access to poles, access to repeater stations.

The agreement allows Dax Contracting Services to enter into a joint venture agreement with any other company or entity so as to execute this agreement which includes the use of cable to transmit and receive data and information from any part of the world, according to the laws of Guyana.