Potential GuySuCo investors hesitant over political climate – Finance Minister
– as divestment of estates put on hold by caretaker Govt
The divestment of the Guyana Sugar Corporation (GuySuCo) has hit a snag, with the Government admitting that investors who were previously eager to buy up assets are now holding back owing to the political climate.
This is according to Finance Minister Winston Jordan, who was at the time speaking at a press conference on Wednesday. He was asked whether the political situation had impacted the divestment of assets being overseen by the National Industrial and Commercial Investments Limited (NICIL).
“The sale of the estates has been delayed. Partly due to the political side. Because nobody is expressing interest when the Opposition says we are going to review sales and so on. So that has not gone down too well and I don’t think at this stage, given our status as interim, we will want to engage in any major privatisation at this time.”
Back in June, it had been reported that accounting firm PriceWaterhouseCoopers (PwC), on behalf of NICIL, was in negotiations with investors to buy GuySuCo assets. In fact, the firm had said that it was close to concluding a deal with investors who were particularly interested in the Rose Hall Estate.
When asked by this newscast whether these are the investors who are sitting on the fence, however, Jordan was reluctant to corroborate this. He noted that this reluctance to invest in the wake of political uncertainty is understandable. And Jordan also noted that those who have already invested are likely to take steps to protect their assets.
“I’ll say, at a general level, that investors are extremely cautious, in light of statements that their buy-in will be reviewed should somebody get into power in the next elections. If I were an investor, I would say hold on, pull my horse out of the race and wait until the next round comes around. That is what investors do. If you’re going to put up uncertain conditions, they’re not about to put their money first.”
In June, PwC Managing Director Wilfred Bhagaloo had announced at a press conference that negotiations with a consortium of investors from Guyana, India and Ghana have reached an advanced stage. He had also revealed that the Rose Hall Estate, which received the most interest from investors, was the targeted estate.
During meetings with Government officials last year, some of the areas bidders had concerns about were the state of the equipment and factories. But a year ago, Government had secured a $30 billion bond through commercial banks both in Guyana and the region as part of the diversification initiatives. In 2018, the interest of $1.5 billion was paid and another $1.5 million will have to be paid this year for the government to sit on the funds.
Back in 2017, Government had announced plans to close the Enmore and Rose Hall Sugar Estates, sell the Skeldon Sugar Factory, reduce the annual production of sugar, and take on the responsibility of managing the drainage and irrigation services offered by GuySuCo.
Subsequently, in November of that year, GuySuCo announced plans to retrench 2500 workers by the end of that year. Amid much criticism, over 7000 were retrenched.
Government then established the Special Purpose Unit (SPU) under NICIL to take over the divestment of GuySuCo’s assets that were earmarked for sale. The SPU then recruited PwC to conduct a valuation of the assets to be privatised and divested.
Government fell to a No-Confidence Motion on December 21, 2018, and approached the courts soon after to overturn the vote. When the matter reached the Caribbean Court of Justice (CCJ), which is based in Trinidad, the regional court validated the no-confidence vote.
Opposition Leader Bharrat Jagdeo has always maintained that the Government should be acting in a caretaker capacity only and not entering into large scale contracts. In the wake of reports that State assets were being sold to cronies of the party, he has repeatedly warned that should the PPP take office, any underhand transactions will be investigated.
Jagdeo’s position was vindicated by the CCJ on July 12, when it noted in its consequential orders that the Government should be in a caretaker status. CCJ President, Justice Adrian Saunders had outlined that the Cabinet, including the President, should have already been resigned, thus, reaffirming that the APNU/AFC coalition is, in fact, and should be in a caretaker mode leading up to elections.
It was only last month that the presence of a Trinidadian Minister at the Guyana Government’s investment outreach in Trinidad and Tobago had drawn criticism from a lawmaker in the twin-island republic. The lawmaker had cause to urge his Government to maintain neutrality when dealing with Guyana’s caretaker Government.