As government deliberates on proposals submitted for the sale of three shuttered GuySuCo estates, Opposition Leader Bharrat Jagdeo has warned that should his People’s Progressive Party (PPP) be re-elected to office, it will not honour the deals.
Jagdeo believes that government should “quit” the process and await the results of the general elections as his party plans to reopen all the closed estates if it wins.
He said that due to the implications of the December 21st no-confidence motion against government, which was declared carried, any contracts undertaken during this current period will be scrapped should his party win the upcoming elections.
“We would not recognise any deals that is not the routine. When I spoke about the routine function of government, it doesn’t involve privatisation now. Any privatisation done in this period with a government that should have resigned, [with] a government that is operating in a caretaker capacity, would be seen as an illegal arrangement,” Jagdeo said yesterday at a press conference he hosted at his office at Church Street, Georgetown.
“This is only making money for a few people and they know this. Which investor is going to want to come now and sign a deal with a fallen government? Unless you are one of those underhand type of people who think you can get a quick lucrative deal before a new government gets in,” he added.
Asked specifically if an agreement with a chosen bidder would be honoured, he said, “No. No. No. Because we will not recognise it because it is done with a caretaker government.”
The sale of the estates could be a lifeline for the thousands of sugar workers, who have been laid off after government closed the estates at the end of 2017.
The Special Purpose Unit (SPU) of the government holding company, the National Industrial and Commercial Investments Limited (NICIL), has been entrusted with responsibility for four shuttered estates: Rose Hall, and Skeldon, East Demerara (Enmore) and Wales. With the exception of Wales, the others were put up for sale.
GuySuCo is still operating the Albion, Blairmont, and Uitvlugt estates, which it has been charged with turning around.
‘Give back the money’
The SPU has said that GuySuCo needs $30 billion over a four-year period to provide a much-needed capital injection, support infrastructure maintenance and upgrades at the estates, which the state is keeping, and develop new co-generation capacity to support estate operations and sell to the national power grid.
As a result, it used state assets and secured a $30 billion bond for the three estates’ turnaround. Republic Bank (Guyana) Ltd, the Guyana Bank for Trade and Industry and other local banks are participating in the syndicated bond. There is also regional input. Sources have said that the rate on the bond is low and that there is also a debt restructuring component.
Nearly $2 billion from the bond facility has been released to GuySuCo for its operational expenses but a tussle between it and the SPU has seen plans stalled, with neither providing clarity on how soon recapitalisation works would begin.
Jagdeo was asked by this newspaper what would happen to the bond facility that was secured and if the banks would be repaid. He said in reply, “You have to look at our contractual obligations with the bank. Right now, if we are not using that money, we should not be paying interest on it. If you are not going to use the money, give it up back. Give back the money. If you are using it, we have to look at the terms and what we are using it for because it is a pretty expensive debt.”
PricewaterhouseCoopers (PwC) was contracted by the SPU and last year began doing valuations of the assets of the shuttered estates in order to secure prospective investors.
Following the completion of the evaluations, the SPU and PwC met with potential investors and 10 submissions were received for the three estates, with only five companies entering bids.
However, only three companies out of the five were evaluated because two failed to meet all the requirements.
PwC completed the evaluations of the three and submitted its recommendation to the NICIL Steering Committee last Monday. The Steering Committee is supposed to then give the information to government for Cabinet to make a final decision.
“PwC would give the score, because they will use a scoring system for the business plans as they evaluate them in terms of technical and financial aspects and that sort of thing. They will look at the bids, score, make their evaluation and recommendations but we still have to submit to Cabinet,” Head of NICIL Horace James had previously explained, while noting that Cabinet will make a decision on the information that PwC and the steering committee submits.
It is unclear if the report has reached government as efforts by this newspaper to reach Minister of Finance Winston Jordan and Minister of State Joseph Harmon were futile. Calls to Jordan’s mobile phone went unanswered, while Harmon yesterday asked to be called back since he was in a meeting. However, when those calls were returned they went unanswered.
The company that led government’s divestment process says that it conducted its work lawfully and any terminating of a sale agreement would be for the state’s Attorney General to address.
“The issue of terminating the sale agreement is really a matter for the Attorney General of your country to address. All I can say is that we have followed the process established and approved by your government, which includes the bidding process and the ranking of the bids, which are traditional processes in many other countries,” said Wilfred Baghaloo, Managing Director (Deals) of PricewaterhouseCoopers (PwC) Tax and Advisory Services Limited.
He said that PwC submitted its report to NICIL’s Steering Committee on GuySuCo’s divestment and his company is “awaiting a response” on the way forward but stressed that “the issue of legality of it for the Attorney General to answer. We have followed due process.”
And on the valuations being made public, Baghaloo said, “I think that question is best directed to the SPU. We have submitted it to the SPU.
Baghaloo previously told this newspaper that questions were asked about the no-confidence motion by bidders and he had shared a similar view. “I don’t know if it is a concern per se, but we have received questions on what do we think about it. As far as we are concerned, political parties come and go but governments remain. Our experiences in other countries are, if an agreement has been reached, an agreement has been reached… I don’t see that as a major issue but people have asked the question on what we think,” Baghaloo said.
But despite the concerns, the PwC rep said the country will be pleased at the recommendation of his company. “Despite these challenges, there is a good horizon for the sugar industry, I believe. We believe there are one or two of the bidders that have some transformative plans but we await the completion of the process. What we are focusing on is the ability to finance. The ability to finance is the most important at this stage. I believe, we will actually make the government and the people of Guyana happy in the medium to long-term. There are no short-term fixes here; only medium to long-term,” Baghaloo noted.
