Seven months after it announced that there had been 10 expressions of interest for three shuttered GuySuCo estates, the government was unable yesterday to point to any progress and said it was seeking to re-engage with the companies as some had lost interest.
“You had interest by several companies and because it [valuation of assets] took a little while, some of [that interest] would have waned and so we now have to re-establish contact with some of the parties who had expressed an interest in the first place. So that is going on,” Director-General in the Ministry of the Presidency, Joseph Harmon yesterday said when asked by Stabroek News for an update during a post-Cabinet press briefing.
“I can say to you that that is a very active issue right now,” Harmon added.
The government has been strongly criticised for mothballing the estates without having a plan for their revival or for the thousands of laid off sugar workers. It had embarked on a privatisation drive for the estates and Harmon had boasted in November, 2017 that 70 companies had signalled interest.
By November of last year, only 10 expressions of interest had been formally received from five companies
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 privatisation.
GuySuCo is still operating the Albion, Blairmont, and Uitvlugt estates, which it has been charged with turning around.
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 in January of this year. The Steering Committee was charged with giving the information to government for Cabinet to make a final decision.
In February of this year, PwC Representative Wilfred Baghaloo had said that his company had done its part and it was up to government to decide.
In early March, he further said that there was no additional information from him at the time and it was the SPU that would have to speak on the way forward.
Complexity
Harmon yesterday said that the evaluation process took time because of its complexity and that works are being done at the remaining GuySuCo estates, even as government continues to pursue investors who had shown an interest earlier.
“In as far as GuySuCo is concerned, GuySuCo is a going concern. So the estates are grinding and so it is not fair to say that nothing is being done at GuySuCo. What you are talking about is the estates which are no longer a part of the new GuySuCo that have to be dealt with. Those were dealt with by PricewaterhouseCoopers. It took quite a while because they were not individually or separately transported, for want of a better word. So there had to be an exceptional amount of time taken to have surveys done and then to put valuations on the individual assets; that is to say the land, the buildings and the equipment that are on these estates,” Harmon explained.
He also said that on the issue of the sale of swathes of land owned by GuySuCo, the President set up a commission to oversee the process to ensure transparency and accountability.
“The sale of lands that are part of GuySuCo’s assets was also intended to raise additional funds to make the estates more economically viable and make them work better and so on. That exercise had not started after the valuation was done by PwC. And under the guidance of His Excellency, the President, we had to establish a state land sales committee that will ensure that there is transparency in the disposal of these assets because in our modern history, this will be the largest transfer of assets by the state to the private sector.
“And so it is important that we ensure that all of the processes are transparent, that they are open and, therefore, there can be no claim that this person got something at one price and the other person at another price. So that is being done right now, and I can say to you that in a short time that activity for the sale of lands that will not remain a part of the new GuySuCo, that that activity, will commence very shortly,” he added.
The SPU had said that GuySuCo needed $30 billion over a four-year period to provide a much-needed capital injection, support infrastructure maintenance and upgrades at the estates and develop new co-generation capacity to support estate operations and sell to the national power grid.
As a result, it 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.
Only recently Minister of Finance Winston Jordan, under whose ministry NICIL falls, said that the state has paid some $132 million in interest on the monies and will have to find a similar sum come November.
Opposition Leader Bharrat Jagdeo this week lamented that the interest was being racked up without tangible returns being seen at the estates. He stressed that should there be a General Election soon and government loses, then the other party will be left with a high debt and no works to show.
Jagdeo has already said that should his People’s Progressive Party (PPP) be elected into office, it will not honour the deals.
Jagdeo believes that government should “quit” the process and await the results of the general election as his party plans to reopen all the closed estates if it wins.
Jagdeo was asked by this newspaper what would happen to the bond facility that was secured and if the banks would be repaid. He replied, “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.”
