Rental of Sussex St drug bond expected to conclude by year-end

The Sussex Street bond

The multimillion contract for the monthly rental of the controversial Sussex Street drug bond isn’t expected to be renewed beyond December 31, 2017, as Public Health Minister Volda Lawrence maintains that the government is still aiming to cease the use of all private bonds by that time.

Lawrence’s pronouncement comes in wake of the concern expressed by opposition parliamentarian Anil Nandlall that one year after the scandal over the rental of the property, the contract was yet to be terminated.

Despite the controversy over the rental of the property, the Ministry budgeted $150 million for the full year’s rent for 2017. Observers had expressed the view that the contract should have been scrapped immediately and that those monies should never have been approved.

Approached as she was leaving a Ministry of  Public Health event held at the Guyana Marriott Hotel last Thursday, Lawrence said, “I had already made a statement that all bonds that are being rented by the Ministry of Health—I said that by the 31st December we will not be using private bonds.”

Asked if there is any possibility of the drug bond contract being renewed, she reiterated that by the 31st of December, “our aim is not to be using any private bonds.”

Controversy erupted last year after it was revealed that government was paying businessman Larry Singh, of Linden Holding Inc., a monthly rental of $12.5 million for the building at Sussex Street to store drugs.

A Cabinet subcommittee was convened after former Public Health Minister Dr. George Norton had been found lying to Parliament in relation to the rental of the bond.

The subcommittee’s report  had stated that the lease should be revisited and strengthened and if there was a refusal by Linden Holding Inc, the landlord, government should give a year’s notice of a termination of the lease and build its own facilities in the intervening period. “With respect to the rental sum of $12,500,000, it is the subcommittee’s considered opinion that the value should be re-assessed as it is likely that a similar facility could be obtained at a lower rate,” the report said.

It added that the general terms of the lease “are not altogether unfavourable” to the Ministry of Public Health as the lessor is obligated under the agreement to maintain the facility at a standard that will meet national and international specifications for the storage of drugs and pharmaceuticals.

However, the subcommittee added that the agreement could be strengthened with more specific terms that address insurance and maintenance.

Just over a year ago, the government in response to the subcommittee report said that the lease was “undoubtedly undesirable” and that it would consider shortening it while expediting the search for another facility. A year later, the lease continues, meaning that Singh continues to collect a large rental. It is unclear if the rental was adjusted.

Nandlall had told this newspaper three weeks ago that despite the sub-committee’s recommendation of an early termination of the five-year contract, it had not been terminated.

“The nation’s taxpayers [have] so far lost nearly 200 million dollars in the process and the Treasury continues to bleed at 14 million dollars month. Yet we are told that we cannot afford to offer subsidies to our pensioners in relation to water rates and electricity bills; we are told that we cannot afford to remove VAT from private education for our children, medical supplies for our sick, educational supplies for our students, agricultural and mining equipment for our farmers and miners; we are told that we do not have money for the sugar industry so tens of thousands of people are being put on the breadline,” Nandlall stressed.

The rental was only made public following questions posed by Nandlall in the Committee of Supply in August, 2016. At that time, he reminded that over $50 million had already been paid in rent but the bond was never used.

The deal with Singh to rent the Sussex Street property for use as a drug bond was said to have been initiated by the APNU+AFC government because extra storage capacity for drugs was needed. This was despite that fact that a government bond existed at Diamond on the East Bank, where more pharmaceuticals could be stored.

Singh had never run a bond storage operation before and critics have said the deal appeared to be a sweetheart arrangement to give business to a PNCR supporter. There have been many questions as to how Singh was chosen given the fact that there was no public tendering for the rental of that building.

The Ministry of Public Health is aiming to expand the drug bond, located at Diamond, East Bank Demerara. There is also a drug bond at Kingston and one at New Amsterdam. $7.6 million was allocated in this year’s budget for the construction of a bond at Paradise, East Coast Demerara to store small quantities of pharmaceuticals.

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