The Fibre Optic Cable Project: Another colossal failure?

Sep 28, 2023

Good and honourable intentions, vigorously pursued to finality, are more likely to produce the desired outcomes. The less-than-honourable intentions, regardless of vigorously pursued, can sometimes produce disastrous outcomes. Always seek to embrace good and honourable intentions. It is the right thing to do, and it brings joy to the heart.

Last week's revelation that the Fibre Optic Cable Project has been placed on hold and would need significant remedial work, came as a shock to many, considering the amount of expenditure incurred to date. Commenced in 2009, the programme is administered by the Office of the President under the heading Information Communication Technology (ICT). It has three main components: (a) installation of communication fibre optic network from Georgetown to Lethem; (b) installation and commissioning of wireless and terrestrial network system from Moleson Creek to Anna Regina; and (c) the One Laptop per Family Programme.

Financing of the programme

According to the 2014 Estimates of Expenditure, the total financing of the Government's ICT programme is $13.827 billion, equivalent to US$69.133 million, as shown below:

The Estimates, however, give no indication of the cost for each of the three components. However, in July 2010, the former President announced that the Government would be providing 90,000 laptops to poor families over the next three years at an estimated cost of US$30 million. He also disclosed in December 2010 that the Government entered into a contract for US$35M with a Chinese firm to build internet networks across Guyana. The former President also indicated that the Government would be installing the WiMax network in all towns and another advanced technology for internet access to the rural areas. He emphasized that the intention was not to compete with GT & T which was launching its own fibre optic cable out of Suriname.

Expenditure incurred to date

To ascertain the total expenditure on the Government's ICT programme, we will examine the audited public accounts for the years 2009, 2010, 2011 and 2012. The 2013 accounts have not yet been made public because of the prorogation of Parliament. We will therefore have to: (a) use the amount reported in the 2014 Estimates as an accurate reflection of the expenditure incurred in 2013; and (b) assume that the entire amount budgeted for 2014 would have been expended. Using this approach, we are able to determine that amounts totalling $13.707 billion, equivalent to US$68.534 million, would have been expended as at 31 December 2014. The following are the details:

Comparing the above two tables, it is clear that the funds earmarked for the Government's ICT programme have been fully exhausted. However, the main objective of advancing "fully into e-government mode, hooking up our schools and our hospitals and our police stations and everything else so that we can deploy technology in the service of our people", as stated by the former President, is far from its realization and remains a dream unfulfilled. The entire loan and grant resources provided by the China Export Import Bank have been drawn down and expended. The loan is repayable, inclusive of interest, in 31 equal semi-annual installments, commencing March 2017 and ending September 2032.

The issue of whether value-for-money has been achieved for this massive expenditure in terms of outputs, outcomes and impact, requires serious reflection on the part of our elected representatives. Collectively, through the budget process over the last five years, they have committed public resources to the project which from all appearances, and in the considered view of experts on fibre optic networks, is now in serious jeopardy. Those responsible for decisions relating to the execution of the project as well as for monitoring it have failed us immensely. They have left us not only without any meaningful tangible assets for the expenditure incurred but also a huge debt burden that future generations will have to repay. Many of those responsible may not be around to witness the completion of the loan repayment.

Unlike the previous three years, the Estimates for 2013 and 2014 (Volume III – Capital Profiles) did not include reference to work on the fibre optic cable from Georgetown to Lethem. This suggests that the project might have been suspended sometime in 2012. Did our Parliamentarians not notice this in their consideration of the Estimates? In his budget presentation for these two years, the Minister of Finance spoke glowingly about the Government's ICT programme without the slightest hint that there was a problem with the laying of cables along the Georgetown-Lethem route. It is also incomprehensible that the Office of the President chose to remain silent on what the Government considers its flagship programme until pressured to do so some two years later.

Expenditure incurred in 2009

An amount of $353.549 million was provided by way of a Supplementary Estimate for the installation of fibre optic cables and terminal equipment. The full amount was shown as having been expended. However, no expenditure was incurred during the course of the year, and according to the Auditor General's report, four cheques were drawn on 31 December 2009 and deposited into an account at a commercial bank to meet expenditure on two contracts. The first contract was signed on 23 March 2010 for the connection of the Globenet System with a terrestrial fibre network in Guyana while the second, signed on 30 April 2010, was for the supply of aerial and direct burial fibre optic cables, and splice enclosures and equipment under the Lethem to Providence E-Government Project.

What the report failed to mention, however, was that the withdrawal of funds on the last day of the fiscal year, i.e. 31 December, to meet expenditure to be incurred some three to four months into the new fiscal year, is a breach of Section 26 of the Fiscal Management and Accountability Act. This section states that "Except as provided for in this Act, every appropriation of public moneys authorized by Parliament for a fiscal year shall lapse and cease to have any effect as at the end of that fiscal year". This is reinforced by Section 31 (3) which prohibits the payment of public moneys unless the works undertaken or goods/services supplied are in conformity with the related contract or other agreement.

As at 31 December 2009, there was no contract in force relating to installation of fibre optic cables and terminal equipment, and therefore the amount of $353.549 million should have been returned to the Consolidated Fund, as required by Section 43 of the FMA Act, instead of being paid into a commercial bank and charged as expenditure for 2009. Indeed, the practice of withdrawing moneys from a public bank account and placing them in a commercial bank to meet future expenditure, is a serious violation of the FMA Act and a manipulation of the accounting system. Neither the Auditor General nor the Public Accounts Committee saw it fit to raise this as a matter of serious concern.

Expenditure incurred in 2010

The sum of $1.686 billion ($840 million overseas funding, and $846.451 million local) was allocated for: (a) the Georgetown to Lethem fibre optic project; (b) the construction of data centre in Georgetown; and (c) the wireless and terrestrial network system from Moleson Creek to Anna Regina. However, the overseas financing which did not materialize. As in 2009, the full amount of local financing was shown as having been expended of which $68.816 million represented advance payments on three contracts for the laying of cables. The difference of $777.635 million, representing the unutilized balance on the budgetary allocation was again deposited in an escrow account at a commercial bank. However, unlike his 2009 report, the Auditor General did not mention whether the deposit was made on the last day of the fiscal year or close to the end of it, but in all probability, this would have been the case. Therefore, another breach of sections 26, 31 and 43 of the FMA Act would have taken place. As of July 2011, amounts totalling $528.287M were expended from the amount placed in the escrow account, leaving an unspent balance of $249.348M.

Expenditure incurred in 2011

The sum of $4.347 billion was allocated for the continuation of work on the Georgetown-Lethem Fibre Optic Cable Project and the wireless and terrestrial network system from Moleson Creek to Anna Regina in addition to the commencement of the One Laptop Per Family Programme. Amounts totalling $2.947 billion were expended, of which $1.390 billion relates to the acquisition of 27,000 laptops. As at September 2012, 9,133 laptops were yet to be distributed. According to the Auditor General's report, the difference of $1.557 billion was in relation to an advance payment on the E-Government Project, the nature of which was not stated.

In our next column, we will continue our discussion of the Government's ICT programme. In particular, we will consider whether it would not have been more appropriate to delay the acquisition and distribution of the laptops until such time that a fully functional network is in place, or whether political expediency took precedence over sound management decision.