The Minister of Labour, Human Resource Development and Training, Minister of Commerce and Consumer Protection, Mr Soodesh Satkam Callichurn, in his reply to the Private Notice Question (PNQ) to the leader of Opposition Mr Xavier Duval, has outlined the reasons why the Government terminated the contract with Betamax.
In the National Assembly, the minister explained the decision taken in January 2015 for STC to terminate the Contract of Affreightment with Betamax Ltd, signed in the year 2009 by the then Government for a period of fifteen years for the transportation of petroleum products from Mangalore, India to Mauritius. Minister Callichurn recalled that the STC was paying more for freight with Betamax Ltd than it could have paid on the spot market and after considering the abusive clauses of the company, the Government decided to renegotiate the contract but Betamax Ltd was unwilling to do so.
In addition, the Minister pointed out that the total capacity of the vessel of Betamax Ltd, the Red Eagle, was 64,300 Metric Tons (MT) and the freight payable for each consignment of Red Eagle was made up of costs such as Basic Freight, Bunker cost, Port Dues at Loading and Discharge Ports and, Demurrage Costs. The total freight including all the above costs paid for Red Eagle during the period 2011 to February 2015 worked at an average of USD 30.79 per MT as opposed to the USD 21 per MT under the previous arrangements, he added.
Furthermore, Mr Callichurn underlined that notwithstanding any fluctuation in prices and regardless of whether the vessel carried full load, STC had to pay Betamax Ltd a fixed freight rate and any demurrage fees had to be paid by STC. Betamax Ltd was also granted a right of first refusal for transportation of any petroleum products which STC would import in excess of Red Eagle’s capacity thus, guarantying Betamax Ltd an annual rent of USD17.6 Million for 100% of the freight capacity of its vessel, regardless of whether the vessel carried a full load for an uninterrupted period of 15 years plus costs of fuel, port dues and demurrage charges irrespective of fall in world prices of freight and lesser number of trips undertaken from Mangalore to Mauritius. Furthermore, they had the guarantee for increase of 1.5% from year 6 and by 2% as from year 10, he stated.
The Minister indicated that legal procedures as regards to the Award pursuant to section 39 of the International Arbitration Act 2008 started in June 2017 passing through the Singapore International Arbitration Centre, the Supreme Court, to finally end at the Privy Council on 14 June 2021. The Privy Council, he informed, rendered its judgement to set aside the order of the Supreme Court of Mauritius and to allow the application of Betamax Ltd to enforce the Award given by the Singapore International Arbitration Centre.
Mr Callichurn highlighted that the reasons put forward by the Privy Council for this judgement are as follows: ‘The Supreme Court was not entitled to review the decision of the arbitrator on the legality of the Contract of Affreightment under the public procurement legislations in place in Mauritius; and the Contract of Affreightment was not in breach of the public procurement legislations.’
Details of Betamax claims
The PNQ pertained to the legal notice served by Betamax Limited on the STC as well as the total sum claimed, the date limit for payment; and the means by which the Corporation intends to finance the said payment.
The total sum claimed by Betamax Ltd, according to a Legal Notice served on the State Trading Corporation (STC) on 15 June 2021, amounts to around Rs 5.68 Billion and the payment should be effected on or before 22 June 2021.
The Minister stated that the total amount claimed by Betamax Ltd comprises, among others, damages in the sum of USD 115,267,199 (about Rs 4.7 billion); the legal and arbitration costs incurred by Betamax Ltd in the arbitration in the sums of USD 2,823,547.20 (about Rs 116.3 million), SGD 272,077.79 (about Rs 8.6 million), GBP 880,296 (about Rs 51.3 million); and interests at the rate of 3% per annum of the sums above, from the date of the Award to the date of full payment, which, as at 15 June 2021 amounts to USD 14,287,362.61 (about Rs 588.6 million), SGD 32,917.69 (about Rs 1 million) and GBP 106,503.76 (about Rs 6.2 million).
Mr Callichurn underscored that the payment modalities are currently being finalized in consultation with the Ministry of Finance, Economic Planning and Development and the payment will be financed partly from STC reserves and partly from Government resources.
