The details of the proposed loan were published yesterday and are due to be discussed at an extraordinary meeting of Chief Pleas on Wednesday 8 April.
The figures were published with an indicative interest rate of 6.2%, which, if repaid over the full 20-year term, would see interest due of £1,163,458 – working out at more than £2,000 per resident.
The rate being offered by the States of Guernsey is 3.925% plus an adjusted take on the Sterling Overnight Index Average, which is expected to remain high or even rise higher over the course of the year.
Security for the loan will be provided by duties on alcohol, fuel and tobacco collected by the States of Guernsey on behalf of Sark.
Sark Conseillers are being offered the chance to quiz officials from Guernsey next week and also examine the full loan documentation. However, Conseiller Frank Makepeace complained yesterday that the loan agreements can only be looked at under strict conditions.
‘This is one of the most significant financial decisions the island has ever faced, yet members are not being given the means to properly scrutinise it,’ he said.
‘The loan agreement cannot be retained, properly studied, or taken for independent advice. In effect, conseillers are being asked to commit the island to a long-term financial obligation after only a limited and controlled viewing of the full terms.’
‘We are told that a senior Guernsey civil servant and a law officer will be available to answer questions.
‘But meaningful questions depend on proper understanding. Without the document to study in advance or refer to, members are left asking questions in the moment, without the depth of preparation this decision demands.’
He said that Sark politicians were being pushed into making a decision with one hand tied behind their backs.
‘We are volunteers, not legal or financial specialists.
‘If we are to take responsibility for a 20-year liability on behalf of the island, we must be given a fair opportunity to understand it fully.
‘A brief viewing does not provide that.’
He added that the financial case for the loan was finely balanced.
‘There is little room for error, and we are being asked to proceed before the final valuation of the assets is even known,’ he said.
‘In simple terms, we are being asked to borrow first and fully understand later. Sark deserves better than that.’
In December both Chief Pleas and Sark Electricity Limited consented to the appointment of Begbies Traynor as the valuer of the company.
The method and basis of the valuation were due to be decided at a hearing first timetabled to take place in January, but this has still to take place.
A spokesman for Chief Pleas said the Seneschal’s Court was now due to list a hearing to direct the company’s work in late March.
The two parties’ estimates of the company’s value are known to differ widely, with P&F chairman John Guille expecting it to be below £500,000, while SEL’s managing director, Alan Witney-Price, has claimed that the market value of the company was £2.4m.