Two Independent senators have questioned the government’s guarantee of a $50 million loan from the Africa Import-Export Bank to upgrade Kensington Oval.
Senators Andrew Mallalieu and Dr Kristina Hinds queried how the money would be repaid, with the latter questioning the deal’s high interest rate.
Senator Mallalieu said the guarantee of the hefty loan is not about the sentimentality of Kensington as the home of cricket but about the country putting its backing on a large sum without a plan from Kensington Oval Management Inc. (KOMI).
“What I am asked as a senator today is to approve the guarantee of a loan,” he told the Senate, noting that a guaranteed loan is normally used by borrowers with poor credit and limited financial means and is the tool to allow them to qualify for a loan.
“We need to recognise that the only reason this would be a guarantee is because this is financially unattractive. KOMI can’t stand on its own, based upon its history, and the government needs to stand in behind it to make a guarantee.”
Taking note of the details outlined by Senator Dr Shantal Munro-Knight who introduced the resolution in the Senate on Wednesday, Senator Mallalieu raised concern over the absence of a business plan among the documents.
“Nowhere in the documentation can I find anywhere, anything that says how this is going to be repaid,” he said.
Speaking directly after him, Senator Hinds said while she supported the development of the Kensington ground as a critical sporting facility, she was concerned about what the money was being used for. She agreed that it would have been helpful to see how the funds were to be spent.
Senator Hinds said she was also concerned about the terms of the loan which has a seven per cent interest rate over its seven-year life.
The university political science lecturer said she was struck by the high rate of interest and questioned why greater effort was not made to get a rate that was more attractive and more in line with the benchmark Libor and Secured Overnight Financing Rate (SOFR) rates which are substantially lower.
She suggested that with a government guarantee, a better rate should have been negotiated.
(SP)
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