Approximately 14 investors have met with officials on the privatisation of the three sugar estates, raising concerns about taxation, work permits, and the country’s energy policy.
The potential bidders hail from Trinidad, Canada and Guyana, the Special Purpose Unit (SPU) of the National Industrial and Commercial Investments Limited (NICIL) noted in a press release.
NICIL is hoping that all three estates located at East Demerara, Rose Hall and Skeldon are sold by the first quarter of 2019.
The meeting, which was held at the Marriott Hotel on September 25, was convened by the privatisation team led by Wilfred Baghaloo of PricewaterhouseCoopers.
The forum provided an avenue for prospective investors to raise concerns, questions or inhibitions with the aim of ensuring a successful privatisation process, Baghaloo stated.
Some of the major questions asked were:
- The status of the new regulatory environment/framework required to facilitate fair competition between the Government and private sector in an industry that was predominately led by the Government.
- Taxation benefits and exemptions that the Government will provide in the risky and challenging industry, which is important to the country.
- What is the Government’s energy policy and how can there be some assurance that new products especially ethanol and electricity can be guaranteed in a market through public policy.
- The tenure/duration of the leases and the security in a political unstable environment.
- The issue regarding work permits was raised.
- The evaluation criteria to be used to select the preferred bidder.
- The potential bidders were extremely concerned about the state of the equipment and factory and whether they are being asked to buy essentially scrap metals
The statement from the SPU did not expand on what assurances were provided to the potential investors on many of these concerns.
However, it quoted Baghaloo who said “The government has gone through great pain to have schedule reopening of all three factories.”
He said the East Demerara Estate operated in the last crop, Skeldon is now being prepared to reopen in November and Rose Hall is aiming to restart operations in first quarter of 2019.
On the matter of the evaluation criteria, it was explained that a technical proposal will carry 70% of the score and the remaining 30% will focus on the price and economics to country.
Baghaloo said, “The primary objective of the government is to get a qualified, experienced, competent and well-structured proposal to operate the factories for the foreseeable future and that is why the technical component is more weighted in the scoring process.”
Many potential bidders requested an extension of the deadline which was initially set for 28th September, 2018. The privatization team agreed to extend the bid submission date to October 31st.
NICIL’s SPU said it has also been working feverishly to make sure that all obligations arising out the recently executed bond have been met.
“This is against the backdrop of recent comments made by the Minister of Agriculture and Guysuco who have signalled a general disinterest in applying the proceeds of the bond for the capitalization of Guysuco, instead appropriating the monies for unauthorized expenses,” the Unit noted.
The SPU said this has resulted in lenders signalling alarm, especially since Guysuco ought to be generating sufficient revenue from its operations to offset its day to day expenses and debt obligations.