Agriculture Minister Robert Persaud yesterday defended the transparency of the deal with an Indian company granted 1.82 million acres of forest here and said attempts to label it another “Barama deal” were ”ludicrous” and there would be no large scale export of logs.
At a press conference at the Guyana Forestry Commission (GFC) boardroom yesterday, Persaud emphasized that there was transparency and compliance with established procedures. “Based on the facts, it is clear that the re-allocation was not shrouded in any secrecy”, he said, adding that suggestions to this effect seem to be part of a misinformation campaign.
According to Persaud, it is “another trick” to misrepresent the progress made within the forestry sector. “We have nothing to hide,” he said stressing that he is ready to debate and discuss the sector’s management stewardship, the policies and whatever is being done within the GFC at anytime, at anyplace and with anyone. If anyone wants to take a potshot, “deal with me”, Persaud said. “Do not try…in this sleazeball campaign of engaging the hardworking staff (of the GFC)”.
Vaitarna Holdings Private Inc. (VHPI), a subsidiary of Coffee Day Limited of India, last year acquired the State Forest Exploratory Permit (SFEP) for 391,853 hectares of forest originally awarded in 2007 to US-based Simon and Shock International Logging Inc (SSI), after signing a Memorandum of Understanding with the Government of Guyana and with the original owners of SSI for a total buy-out in which 100% of the shares were transferred to a new subsidiary, Dark Forest Company (S) Pte Ltd. (DFCPL).
Subsequently, the company acquired the 345,961 hectares concession which was originally awarded to Caribbean Resources Limited (CRL). The government accepted an offer of $600 million by VHPI for the Timber Sales Agreement (TSA) which had been terminated and re-possessed by the government in 2010 from CRL, because of continuous non-compliance with the terms and conditions of the TSA. The total area now held by VHPI is 737,814 hectares of forest, around 1.822M acres.
The deals were not publicly announced by the government and it was only after the media asked questions last week following a Times of India report that the GFC issued a statement.
Persaud said yesterday that the processes used to issue VHPI with the SFEP previously issued to SSI and the TSA previously issued to CRL were transparent. He said that it was essentially a reallocation of a suspended SFEP and a repossessed TSA that followed all the necessary requirements. “These are not…new concessions or new areas”, he stressed.
The Minister pointed out that in relation to SSI, VHPI bought out the company through a business arrangement that was approved after the necessary due diligence was carried out by GFC and once that transaction was approved, they got access to the SFEP. In relation to CRL’s TSA, he said its availability was made known. “In fact contrary to what was reported, it was not that this was a public or a quiet arrangement. Everyone knew, all stakeholders knew that this particular TSA was in fact being repossessed and would be made available to other stakeholders who are interested”, said Persaud emphasizing that it was a transparent process.
Repossessed
“Even before the concession leased to CRL was repossessed, GFC had indicated to both CRL management and other concession holders that this concession would be repossessed unless a suitable joint venture or complete takeover was effected by some company. Unfortunately, no company took up the offer”, he said. Persaud related that after it took over SSI, VHPI then approached the government and the GFC and applied for the concession to be reallocated to it and this was after it was already public knowledge that the concession was being repossessed.
Responding to questions later, Persaud said that not because someone doesn’t hear of it means that something has not been public. The stakeholders particularly those companies adjacent and those operating in the forestry sector were made aware and the GFC from time to time would also have outreach meetings, he stated. The Minister also said that ads are placed in the media from time to time inviting persons who are interested, to come and uplift information on particular concessions, SFEPs and areas that are to be allocated and this is done constantly. He said that he was puzzled by the suggestions of secrecy.
GFC Head James Singh said that in the case of CRL’s TSA an ad was placed in the media sometime around last July.“This company heard, knew about it, probably saw the ad in the newspaper and came in”, Persaud added. He said that a comprehensive due diligence was carried out to ensure that the company has the necessary expertise to undertake the various tasks that are required as well as to establish that the company has sufficient financial resources, and has a track record of carrying out harvesting and processing operations efficiently. Arrangements were concluded in Georgetown.
Logs
Meanwhile, the Minister said that there will be no large scale exportation of logs since the company has committed to getting involved in downstream activities. He noted that logs exportation is not a violation of the National Forest Policy. It is recognized that the processing capacity here is limited but the Policy, currently being reviewed, encourages and promotes value-adding and when the review is complete, would provide stronger disincentives for log exports, he said.
Further, the Minister noted, the SFEP held by the company does not give it logging rights. “There are several steps that are involved in the conversion of an SFEP to a TSA at which time then you will have logging and extraction rights for the resources,” the Minster said. He pointed out that the company firstly has to do a forest inventory, present a business plan that incorporate the inventory amongst other requirements, and conduct an Environmental and Social Impact Assessment (ESIA).
In doing the ESIA, there will be at least two opportunities for persons to indicate their support or objection to the granting of logging rights to the company, Persaud said. He noted that this documentation has to be provided to the satisfaction of the GFC, the GFC Technical Committee, the GFC Board of Directors, the EPA, EAB, the Cabinet Sub-Committee on Natural Resources, and then Cabinet before approval for logging is given and this process hasn’t commenced. He later noted that to convert an SFEP to a TSA sometimes takes two to three years.
Persaud said that clarification was sought on the report in the Times of India that logs will be transported to the company’s furniture plant in Chikmagur in India and the statement is only partially representative of the facts. In reference to a letter by Janette Bulkan appearing in yesterday’s edition of Stabroek News that VHPI’s log exports would not comply with the PPP pledge to focus on value-added, Persaud said this was untrue and developments in the forestry sector exceeded what was envisaged in the manifesto.
“What is more ludicrous is the attempt to create a comparison with this investment deeming it another Barama deal”, the Minister said.
He pointed out that no company which has been leased a forestry concession including Barama has ever been required to pay any amount of money to access the forest resources apart from administrative fees. “We demanded that VHPI pay $3M US dollars or $600M Guyana dollars to access the concession and a concession size which is only about 25% of Barama Company’s leased concession”, he emphasized.
Persaud also noted that Barama was granted consecutive five-year tax holidays and other concessions-none of which VHPI enjoys. In addition Barama pays just about G$800 000 as acreage fees for access to 1.6 million hectares per annum while VHPI will have to pay G$81 per hectare or G$28 022 841 for access to 345 961 hectares. “This company that has only 25% of the size of Barama is made to pay close to $30M”, he observed. He said that this means that if VHPI had Barama’s acreage, they would have paid in excess of G$120 000 000 per annum to the GFC.
The minister also pointed out that Barama enjoys a preferential sliding scale rate on royalties, moving from G$5 per cubic foot to G$25 while VHPI has been made to pay the royalty like any other company. He noted that until 2009, Barama paid export commission only on greenheart but VHPI will export logs only in accordance with the National log export policy. VHPI is not here as a logging company but will be involved in value-added, he stressed.
Regarding the US$3M fee paid by VHPI, Persaud said that the figure was arrived at through a process of negotiation: “putting some value as to what are some of the investments that would have been made prior to this company coming in and done by CRL”. He noted that it was an asset that was being used to mobilize resources to take care of the fallout created by the collapse of CL. “We wanted the people of Guyana to get the best arrangement as we always seek to do”, the Minister said. “We welcome this investment”, he stressed.
Meantime, in relation to VHPI’s current activities, Singh said that the company is upgrading facilities as well as doing a pre-harvest inventory where it holds the TSA. In relation to the SFEP area, the terms of reference for the ESIA are being drawn up and there will be a scoping exercise soon, he said.
