The government has granted a US$100,000 loan to the owners of the “fast ferry” — MV Jaden Sun — to replace a damaged engine, which had caused services to be suspended until further notice.
Prime Minister Dr. Ralph Gonsalves made the announcement at a press conference on Monday, where he also announced concessions on fuel for all passenger ferries operating within St. Vincent and the Grenadines (SVG).
Gonsalves noted that Jaden Sun takes two hours to sail one-way between Kingstown and Union Island, a six-hour journey on the other major carrier, the MV Barracuda, which, unlike Jaden Sun, carries cargo.
Gonsalves said that sea transport is expensive to this multi-island state.
“The fast ferry is an important service, and the fast ferry is very expensive to run,” he, however, said.
He said that figures indicate that for a round trip between Kingstown and Union Island, some 96 nautical miles, Jaden Sun burns EC$6,000 worth of fuel.
The owners of the Jaden Sun were losing money even when the ferry was operational, the Prime Minister said.
“They ran into problems, they were losing money and they had to buy a new engine because one of the two engines was down,” Gonsalves said.
He said he invited the owner of the vessel, Elvis Gooding, to a meeting last year to discuss ways in which the government could assist.
Gonsalves said that the proposal was circulated to the relevant members of Cabinet, but action on it was delayed because of emphasis on the relief effort after the December 2013 floods.
The Cabinet has since agreed to give duty free concession on the fuel used by all ferries that carry passengers within St. Vincent and the Grenadines.
“Of course, the fuel has to be bought through the bonded warehouse system, so that you have a reputable dealer you are dealing with. That will save the fast ferry just over $1,000 a day,” Gonsalves said.
The government has also agreed to buy from Jaden Sun, up to $1,000 worth of tickets a day for up to 300 days a year.
Public servants and students will use the ticket, which will be bunched.
Gonsalves said that because the ferry was losing money, it would have been difficult for the operators to go to the bank to seek a loan to replace the engine.
Further, such a loan could have attracted between 10 and 12 per cent interest per annum.
The government has agreed to lend the ferry operators US$100,000 at 4 per cent interest per annum over 10 years, with two years grace.
Gonsalves said that a similar offer is open to Jeffery King, owner of Barracuda, which, he said, had to replace one of its two engines and two gearboxes recently.
“But if he wants it (the loan) next week, if he wants to go and buy it (engine), I will facilitate it,” said Gonsalves, who is Minister of Finance.
The monies for the loan come from PetroCaribe, the oil alliance of some Caribbean states with Venezuela to purchase oil on conditions of preferential payment.
“We have done a lot of work in the Grenadines. … But when you see a government goes out of its way like this and acts in this manner concerning an issue of transportation — sea transportation, you know that this is a government which wants to see our multi-island state to be one always, and the links must be solid,” Gonsalves said.
He added: “Now, hopefully, we would not see the rapid increase in fares that we have been seeing in some of the ferry services.
“[I] don’t think anybody can complain about this reasonably,” he further said in reference to the assistance given to the ferry operators.
“I think it is a good use of government resources to help with something which is of vital importance to us, in the same way that we use resources to help St. Vincent link with the rest of the region through [regional airline] LIAT.
“It is the same principle. Different context, but same principle,” he said.
I agree with that. The Fast ferry raised the standards for inter-island transportation and the government should be commended for this effort.
On the surface of it, this sounds like a feel good story. However, the old cynic in me just will not allow this to sit well.
I am never 100% comfortable when governments mix too closely with private enterprises. The model has never been shown to work and it further erodes the concept of capitalism.
While I agree with providing assistance where possible, it should be done on such a proactively generic basis that the decision to intervene should never be done on a case by case basis.
I would further argue that market forces have a role to play here. if the service is in demand, then by all means provide a service that is financially viable through the private sector.
If the service is in demand but is not possible to be provided through the private sector, then the public sector may wish to consider stepping in.
One must not only ensure that ones actions are above reproach, one must also ensure that the perceptions of ones actions are above reproach.
While I do understand your point that government intervention can be harmful as was proven in many economies, we must also understand that there are some pressing factors which demands government intervention. Without the government’s aid, residents of some Grenadines island will have to pay more and in some cases spend close to 4 hours travelling on rough waters versus paying a bit less with less hours. Unless you have had to endure travelling on a daily basis then it will be incomprehensible for you to understand. As a resident of the Grenadines I am happy that there was an intervention. Sometimes you’ll have to help a baby to walk but still leave room for them to develop on their own, and that’s exactly what is being done through duty free concessions and the buying of tickets.
Although the government may be paying for 1000 tickets for 300 days a year; that’s a maximum of 5 persons a day being paid for by government daily (assuming that the trip is being paid for to the lower Grenadines). On average for Jaden Sun to be profitable or to cover the fixed cost on a daily basis, the owner will require that there be over 30 extra persons travelling daily. So is the government really intervening enough to strangle the private growth of the ferry? I don’t think so. There will still be room for it to grow on it’s own. Government’s intervention was needed in this instance.
We the residents of the Grenadines are so overwhelmed
With joy to hear such good news in every government there is a bit of
Shade but we are just grateful to have this convienient means
Of transport back with us and our beloved captain elvis and his crew.
Thank you Ralph Gonzalves.
Bravo Comrade. Bravo.
You saw the problem, you weighed it then you applied a broad and specific fix.
Governments the world over, the world over, subsidize fast ferries. They are a beast to run and operate.
Elvis has more cojones than all of them put together and he deserves a helping hand – like all other fast ferry operators. The world over. A helping hand only because as the Comrade said, it is an important service.
Its great to see that Gonsalves has taken my advice, although it has taken him far to long to do so.
I advised government help in June of last year, in fact at that time I wrote numerous articles and comments on different media. The figures are about the same only cloaked in buying tickets and tax free fuel.
Thank you PM for taking my advice, shame you didn’t have the fiscal foresight to act in better time, instead of waiting until Mr Gooding got himself into trouble.
https://www.iwnsvg.com/2013/07/11/the-ferry-service-of-svg-and-beyond/
Peter Binose
I will like to personally thank the prime minister for what he has done,because we the people of the grenadines have missed the jaden sun(fast ferry)a great deal and would like to see it up and running again and to reunite with it’s lovey staff.
The rich is getting richer, while the poor going round begging… the Hospitals needs care patient carry their own toilet paper and all supplies with them to the hospital, patient died while daughter went and buy toilet paper, but the government can put millions for boat engines , O God have mercy
We thank the Government for the assistance in loan funds and concessions on fuel for the ferry service. This action is somewhat similar to actions taken before by the NDP administration. Nothwithstanding the piecemeal approach in this matter we think that the time is Now for the government and the Opposition to look at transportation I While this is a piecemeal approach to our transportation issues in the Grenadines we think that the Government and the Opposition should use this as a lifeline to address and put the matter on a SOUND footing. The time is NOW.
Hello! Molseen Mulzac
In the scheme of things a hundred thousand loan is small fry, what our Marxist regime would likely describe as chicken feed, or bread fruit fertiliser.
If you remember someone from the ULP took almost 30 times that amount in US$ 1million into the NCB to change into EC dollars, and that was just jolly up money.
So you can see its really small change when your constantly spending that on a weekly basis just travelling.
One thing for sure Elvis will not get to be a fat pig in a suit on this. But he will be able to give us and the islanders a service they deserve after they were punished by the departure tax in the past.
Again..don’t matter how good the PM continues to act for the benefit of ALL , Peter and others continues to come up with some negative vibes. Thank you Comrade for doing the work you do. You’re a hands on leader from day one….relentlessly reaching out to ALL Vincentians for the benefit of ALL.. Thank you sir!