Brazil to Guyana fibre optic cable project…Repairs start, formula for government funding “not worked out” – says Dax Contracting Services

May 08, 2015 News

Repairs have started on the Brazil to Guyana fibre optic cable. Head of the Presidential Secretariat, Dr Roger Luncheon, said that works began early last month.

Faisal Mohamed of Dax Contracting Services

However, the “special formula” to be used to determine how much money Government will spend to aid the contractor during a crisis, is yet to be worked out.
This is according to Faisal ‘Dax’ Mohamed of Dax Contracting Services.
Mohamed was asked to explain how the government said on one hand that he will be providing the services free of cost yet a clause in the agreement sees him receiving funding under certain circumstances.
Clause eight of the agreement states, “The Government of Guyana undertakes to contribute financially to the cost of the specific maintenance service of an emergency nature according to an approved formula that takes into account the government of Guyana’s provision of duty free concessions for equipment, spares and tools.”
He was also asked to explain this formula referred to in the clause.
Mohamed said that one must remember that the “contract is for 40 years and it would involve certain maintenance work such as the repairing of utility poles. Government would pitch in for that.”
As for the formula, he said that Kaieteur News was posing the question to the wrong person. He said that he does not know anything about the formula, “I have to sit down with them and work it out.”
Dax Contracting Services was also granted exclusive usage to “some pairs of fibres” in the cable. He claimed, however, that the number has to be determined. He stressed that the architect of the deal was the government.
Dr. Luncheon said that the contract specifically excluded any arrangement of Dax using the fibres granted to him to become a telecommunications operator.
However, Mohamed said that he cannot say for sure whether he would not use the cables for that purpose. He said that the crux of the matter is getting the cable up and running.
Though there is no timeframe for completion of the project in the contract, the Dax proprietor said that he is looking to get the job done within six to eight months.
Dr. Luncheon had told the media that the cost for procurement of the cable as well as laying it was US$4.5M. But in a published advertisement, the government said that US$4.5M was the cost of laying the cable. Asked to clear the air on this matter, the contractor laughed heartily and said, “It’s whatever Luncheon said.”
He had said that the entire repairs programme would cost about US$10 million.
Why is he spending US$10M on a $4.5M cable? Mohamed said that he is positive that the repairs will cost him, “much less” than he estimated.
He said that he only signed the contract “to make a living” when asked why he signed on to something that he is unable to explain or claims to not fully understand.
Mohamed added, “I think I made a big mistake trying to take on this project because no one is saying anything positive. No one is saying we doing a good job. Everybody is on our bones. I can do without this cable.”
He was asked to comment on Clause 10 (2) of the contract which says, “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.”
The cable contractor said that it is simply a means for Government to protect itself from any legal action but emphasized that he would not be facing any possible risk.
Mohamed said that given all that has unfolded about the project and the contract, he will “now” get his lawyer to review the contract which lacks a penalty clause or a termination clause.
On March 16, last, Dr Luncheon on behalf of the government negotiated with and signed the special agreement with Mohamed.
Under the agreement, Dax will undertake to the repair, use and maintenance of the fibre optic cable from Brazil. This contract is for an initial 25 years with an option to renew it for a further 15 years. This gives Dax a total of 40 years of cable rights.
Government has also undertaken to provide Mohamed with the necessary support to receive and transmit data by way of the cable after granting the company an operating licence.
And for free, Mohamed will be able to use some of the Government-owned fibre optic cables and structures including, roads, the poles, access to repeater stations and other things.
Dax Contracting Services would also be provided with tax exemptions and incentives, including but not limited to tax holidays, remissions, tax waivers and duty free concessions on equipment, spares, tools and vehicles.
The vehicles would be two SUVs, and three four-door pick-ups, renewable three years for the next 40 years. The government insists that it will retain possession and use of the bandwidth, as agreed to between Dax and the government.
As the owner of the cable, Mohamed can invite and sign with any company or entity to use the cable to transmit and receive data and information from any part of the world in the same way that today’s telephone companies operate.
Dax Contracting Services, owned by Mohamed, was one of the five contractors hired to lay the cable from Lethem to Georgetown.