A group of Chinese bank and business representatives left Guyana yesterday after scoping out possibilities for investment here including the taking over of the operations of the beleaguered Baishanlin.
“We have met with a delegation from the China Development Bank and a group of investors …they were concerned not just of Baishanlin’s operations here but also a group was looking at possible investment opportunities here…,” Minister of Natural Resources Raphael Trotman told Stabroek News yesterday.
Trotman informed that representatives from the China bank, which were a part of the delegation, came to Guyana to discuss Baishanlin’s operations, since they were the loan providers for the company’s logging investments here and the company has since defaulted on that loan.
“The bank has only one loan in Guyana and that is with Baishanlin Forest Development. They are very concerned that the loan has gone into default…they are concerned about their reputation because they have a good global standing… please note, that their visit here was not to make a case for Baishanlin but to see if anything can be done to recoup their money and so forth,” Trotman explained.
“The Government of Guyana is always doing business with the people of China and we do not like see loans go into default and most is lost and that kind of thing …we indicated we are open for doing business but we are rigid in ensuring compliance with the laws of Guyana and we made this clear to them,” Trotman added.
Baishanlin has faced financial difficulties coupled with the Guyana Forestry Commission (GFC) and Guyana Revenue Authority (GRA) moving to repossess forestry concessions granted and seize equipment and other property in lieu of sums owed.
The GFC said in September that it was withdrawing all of the company’s forest concessions and its decision to repossess came after the company failed to deliver on agreed steps to introduce new investors to the Commission and having been given time to prove that it had an acceptable plan to clear approximately $80 million in debt to the commission.
For their part, the GRA, seized property of the company from its Coomacka and Providence locations claiming that they are owed some $1.5B as Baishalin failed in its contractual obligations to Guyana. GRA stated that Baishanlin did not undertake the aspects of the project specified in the investment agreement signed with the Government of Guyana i.e. upgrading and building a modern wood processing facility at Conception, Linden.
It was also argued by the GRA that Baishanlin failed to create and sustain employment for 150 persons over three years and that the company failed to procure and provide all of the investment and other financing needed for the undertaking in the sum of US$130m over a three-year period from the date of the signing of the investment agreement.
Baishanlin has failed to fulfil several commitments made under its investment agreement since its establishment here in 2006. Amid much pomp, it had also announced big plans in various sectors for Guyana, but concerns have been raised by some analysts that its primary interest is logs for export, with little downstream processing. The company kept on gathering forests and increasing the export of logs all the while gaining huge fiscal concessions under the former PPP/C government.
They have also not lived up to commitments to do value-added processing, despite benefiting from billions of dollars in tax concessions.
Following the actions of the GFC and GRA, Baishanlin had asked government for three more years to make good on the long-awaited promises, but the APNU+AFC government said that not only the time requested is too much but that their leniency and patience have been exhausted.
Trotman yesterday echoed this point saying that as far as government was concerned Baishanlin’s operations here “are over” and that discussions with the bank and possible investors was really to see if an investor would buy over the equipment which is left, as they possibly start up a fresh business.
Industrial park
The Minister of Natural Resources said that the feedback received from the delegation was positive and the team discussed the possibilities of establishing an industrial park in Region 10, which would also include a wood processing plant. “They would like to establish an industrial park and a wood processing plant would be a part of it… with all they have seen over the few days that they have been here, the feedback seems good,” Trotman asserted.
Baishanlin’s owner, Hongbo Chu, told Stabroek News yesterday that the banking officials will now return to China to analyze the feasibility of their continuation of financing for any company seeking to buy over Baishanlin’s operations and themselves establish a presence here.
Chu related that he would have wanted to continue his logging operations here but the bank would not have it and he has in turn taken to finding other investors in the hope of making back their money.
“The CDB, which belongs to the Chinese government, has a fifty-one percent share in Baishanlin so they are worried about their investment and the monies that they have lost already. They want to see if another company takes over our company if it can work out that they get back their money but they first have to go home and discuss” it, Chu said.
“They met with the minister. They want to come and take over the Baishanlin project. But the forestry they take back all of the concessions and the GRA they took all the equipment and they have to now get back all the equipment. They want to continue to set up the sawmill, but they first have to know what is everything…they want to solve the problem,” he added.
Chu informed that he was told by the team that government was very welcoming and the discussions were good but that it was also pointed out by Guyana out that there are certain policies that have be adhered to.
He said he understands that the prospective investor, who left yesterday after spending two weeks here, would be working on submitting a proposal to government of its planned investments here.
As it pertains to the submission of the Chinese investor’s proposal to government. Trotman said that government would like to “have things wrapped up” before the end of the year.
