In defence of the controversial Parking Meter Project, Smart City Solutions (SCS) said the contractual agreement it shares with the Georgetown Mayor and City Council is in keeping with standards for termination established by the World Bank and the European Investment Bank. In lengthy press statement on Monday, SCS said the confidentiality clauses, which form part of the contract, are common business practice across the world where large investments are involved.
“Doing business in Guyana should be no different if the country is seriously open to foreign private investment. In fact, there are numerous precedents in Guyana in the mining, oil and gas, forestry, hotel, construction and other industries which may be cited,” the company executing the contentious project stated.
However, it contended that although both parties had agreed not to publish the full extent of the contract, all the critical terms and conditions with respect to its implementation were given extensive publicity from the outset.
The company further pointed out that full contract was made available for review by the Attorney General’s office and the Ministry of Finance, both of which reviews were made public, and both of which reviews concluded that the Contract was legal, valid and binding.
Despite the legality of the contract, a number of recommendations were made by the Attorney General’s Chamber and the Finance Ministry which led to substantial amendments of the contract, according to the parking meter company. SCS emphasized that it was on the basis of these amended terms and conditions that the metered parking project was rolled out.
“The media, certainly Kaieteur News, and, indeed, the general public, are well aware that the original contract itself has been substantially amended to accommodate government and public concerns, yet the Kaieteur News, selected for publication, as current and in force, those terms of the contract which the newspaper must know were substantially amended from the time of its signing,” SCS said.
It said contrary to reports that the contract is for a term of 49 years, it is only for a period of 20 years with possibility of extension for a second 20 year term with M$CC’s approval.
“It would be useful at this point to emphasize that according to the World Bank, ‘A concession is typically for a period of 25 to 30 years.’ Further sources, such as USA Department of Transportation, cite in reference to the longevity of concession terms, that ‘The term of the concession, which for highway projects have extended beyond 30 years and up to 99 years’,” SCS further pointed out.
In further clearing the air, the company said that the unilateral termination of the contract by the M&CC would carry with it a penalty equal to SCS’ investment plus such investment multiplied by 15% for the remaining term at any such time of unilateral termination, not 25%, noting too that the company is not benefiting from any tax exemption.
“For any established newspaper to editorialize that the clauses in a business contract involving a committed investment and delivery of specific services costing an estimated US$10 million and an expectation of a 15% return on the investment, which are there to protect against a potential unilateral termination of the contract for “convenience” by its counterparty are somehow “shocking”, itself, displays a shocking ignorance of matters of legal and business standards for contracts of this scope and nature, or much worse, a calculated intention to mislead its readers,” SCS stated.
It added that the necessity of such a termination clause becomes all the more apparent when considering that it protects specifically against a scenario whereby the M&CC could unilaterally terminate for convenience even after the company would have invested significantly into the project.
“The company’s platform obligations, for instance, include multi-space parking equipment with solar power, backup batteries, integrated communications with regularly updated performance data and login access to the City, road signs, a call center, an integrated enforcement platform and payment and distribution platform, and keeping all the platforms up to par and maintained not only for wear and tear but for any acts of vandalism, accidents and any required improvements,” it explained.
Additionally, as a matter of standard, SCS contended that research of comparable projects demonstrates that the termination clause of the Georgetown metered parking contract is well within, and even quite modest, as compared to market practice.
In defense of its position, SCS pointed to a report entitled Termination and Force Majeure Provisions in PPP Contracts, Review of current European practice and guidance, March 2012.