Barbados Government Seeks Higher Rent from Pine Hill Dairy for Occupied State Land

The Barbados Government is asking Pine Hill Dairy (PHD) to pay commercial rent for the state land it has been occupying since 1966.

Barbados TODAY has learnt that under a 50-year lease arrangement which has now expired, this country’s lone dairy processing plant had been paying the government a rate of $100 per year under a Public Private Partnership (PPP) agreement.

The National Housing Corporation (NHC) has now opened negotiations with the company to try to ensure that under the new lease, the government gets a higher rate.

“The National Housing Corporation and the Pine Hill Dairy are in discussions at this time and I would prefer not to speak on this matter because we are in discussion on the lease and rental of their property,” NHC General Manager Ian Gill told Barbados TODAY in an interview on Monday.

Asked if similar nominal lease and rental rates were in existence for State-owned properties, Gill replied: “I am not aware. This is a special case that may have occurred since 1966. It’s something that we are in discussion [about] at this time, so I would prefer not to move outside of my boundaries at this stage.”

When Pine Hill Dairy started operations in 1966, it was partly owned by the government, under the leadership of the Errol Barrow-led Democratic Labour Party (DLP) which entered into a joint venture with 360 Dairy Farmers, the New Zealand Dairy Board and Northern Foods Ltd. of the United Kingdom, with each entity receiving 25 per cent of the shares.

Acting Permanent Secretary in the Ministry of Housing, Lands and Maintenance Herman Nikita Smith explained that back then when state-owned enterprises (SOEs) rented or leased property from the government under 50-year arrangements, they paid a peppercorn rate without contemplating the possible sale of the business to private hands.

Smith said that going forward, all lease and rental transactions of this type now include a review clause that would allow the government to impose a commercial rate if the business is sold to a private entity before the lease expires.

“Years ago, when we got into these 50-year leases with statutory agencies, it wasn’t a threat because of the fact that it was an agency. And I don’t think that at the time they contemplated a sale of the company. But when the sale happens, the lease would continue to run at that rate. And as soon as possible after that, when a new lease is required, then you adjust the rate,” the acting permanent secretary told Barbados TODAY.

He identified the Barbados Port Incorporated (BPI) as an SOE which is paying a nominal rent to the government.

“So that our rental to the Barbados Port Inc. is $100 per year for 50 years. When that lease ends and it is still a state-owned entity, it will probably be still a peppercorn rent as far as the government trying to extract money from other government departments,” Smith asserted.

However, he said, if the company “changes hands in favour of the private sector, the government should naturally receive a commercial rent”.