Saturday, November 17, 2012

Deal with BAE saved T&T millions: AG Ramlogan

Attorney General Anand Ramlogan on Friday reiterated in Parliament what he said the day before - that the Government of T&T save the country millions of dollars with its victory in the OPV arbitration matter with ABE Systems of the Great Britain.

And he against stated that the People's Partnership administration made the right decision to cancel the contract for three Offshore patrol Boats.

He noted that government has spend just a fraction of the budget it had allocated for legal fees in the arbitration matter. £10 million was set aside but the state used just over £2 million (TT$20M). He also noted that the state has saved millions on maintenance costs alone that was a part of the OPV deal negotiated by the previous Patrick Manning PNM Government.

Ramlogan also seized the opportunity to slam the Opposition People's National Movement (PNM) for its negative attitude that created "doom-and-gloom scenarios", accusing the party of continually putting its foot in its mouth.

He also had to correct the Guardian newspaper for publishing erroneous articles, citing three such instances, including then most recent on Friday when the paper claimed that the government was in secret negotiations to buy used patrol boats from BAE.

Speaking about the OPV matter, he said it was one of the Manning administration's mega projects that was ego driven by a government suffering from delusions of grandeur. He said the PNM Government's agreements amounted to £189,167,587 (TT$1.995 b).

He outlined the agreements:

  • a contract in which BAE Systems agreed to sell and the Trinidad and Tobago Government agreed to buy three OPVs and related services–maintenance and training
  • a contract in which BAE Systems agreed to supply and the Government of Trinidad and Tobago agreed to buy two interim vessels and related services–maintenance and training
He also provided details of the financing for the project:
  • a Commercial Credit Facility with BNP Paribas, London Branch, and Lloyd's TSB Bank to meet 15 per cent of the cost of the contracts for a total amount of $299.36 million (£28,375,137)
  • an Export Credit Facility with BNP Paribas, London Branch, and Lloyd's TSB Bank with a guarantee from the Export Credits Guarantee Department under which the facility provided for a loan of $1.696 billion (£160,792,450) to meet 85 per cent of the cost of the contract
The AG also give legislators an itemised list of the cost of the vessels, maintenance and training:
  1. $1,324 billion (£125,569,690) - price of three vessels
  2. $119.93 million (£11,368,027) - price of two interim vessels
  3. $421.20 million (£39,924,795) - maintenance services
  4. $76.149 million (£7,217,967) - training services
  5. $189,288 (£17,942) - foreign exchange difference
  6. $52.59 million (£4,985,039) - Exposure fee
  7. $1.266 million (£120,011) - Forward Exchange Commission
Ramlogan said there were other costs associated with the implementation of the OPV project, including infrastructural and logistical support of $164 million that was covered by the Government Treasury. He said, "We have retained the benefit of much of this expenditure and would have not have been in a position to recover same." 
Ramlogan stated that the government had drawn down TT$1.482 billion (£140.5 million) up to the time of cancellation of the order on October 20, 2010.

"To date, the sum of $1.041 billion (£98.764 million) remain outstanding under the loans. Therefore, when the settlement of $1.382 billion is applied towards the outstanding balance, the surplus to the Government of Trinidad and Tobago will amount to $341 million," he said.

Ramlogan explained why the People's Partnership Government refused to accept the vessels in a defective condition.

"The risks were too many and too great. In response, BAE served a notice of arbitration on the Government, claiming damages in the sum of $611,032,000 (£57,917,727). 

"Trinidad and Tobago filed a counter claim in the sum of $1.654 billion (£156, 838,607.70). This figure represents the maximum amount claimable and would have had to be discounted to take into account first thing first the absence of proper documentation due to poor project management to substantiate millions of dollars worth of expenditure. 

"This lack of proper documentation remains a curious mystery that could have had an adverse impact on the State's ability to recover its full pound of flesh. The Government has therefore undertaken a review of the systems and procedures for record keeping in the execution and implementation of such large projects," said Ramlogan.

"The Government was prepared to stand up for its rights—the rights of the people—against one of the largest military defence companies in the world. We were ridiculed for doing this by those on the other side. 

"They (the opposition) did not stand with us in defence of the rights of the people. Instead, they attacked us and made dire predictions with their usual 'doom and gloom' predictions," he said.

He provided the benefits of the arbitration stating:
"1. The settlement amount is $1.382 billion (£131 million). After repayment of the billion-dollar loan the Government will end up with a surplus of $341 million (£32.236 million).

2. Further, after we pay off the loan, money we would have spent allocated for repayments can be used for other things.

3. Because we have paid off the loans now, we will save $57.149 million (£5.417 million) in interest.

4. The Government has saved on the operational costs for the three OPVs which would have been approximately $32 million per year and the annual cost of $24 million for salaries and allowances of seamen to operate the vessels."

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Jai & Sero

Jai & Sero

Our family at home in Toronto 2008

Our family at home in Toronto 2008
Amit, Heather, Fuzz, Aj, Jiv, Shiva, Rampa, Sero, Jai