Peeping Tom - What concessions went with this deal?

Peeping Tom – What concessions went with this deal?

May 15, 2008 Peeping Tom

I am grateful for the acknowledgment by the government that Queens Atlantic Investments, to whom the Sanata Complex has been leased, got more than the tender offered.
This is clearly a different position from the one originally enunciated when the President said that the Head of Privatization Unit had adequately dealt with the matter. Now it is obvious that the Privatization Unit’s understanding of Appendix 1 of the Privatization Policy Framework Paper (PPFP) is flawed.

The Peeper pressed the issue and showed not only where the original tender was solely for the printing and dyeing factory, the equipment of which was handed over to the government from the Chinese when they departed but also that Appendix 1 provides for negotiation only where all the bids received were defective.

Now that we have an acknowledgement that Queens Atlantic got more than the printing and dyeing factory, it needs to be asked just who will face the consequences for this situation. We need to find out just who will fall under the hammer for the handling of this issue.

Surely the leasing of the entire complex could not be an oversight. It could not be since the Guyana Revenue Authority which operated a storage bond in the very complex may now have to spend hundreds of millions to build a similar facility elsewhere, or perhaps to rent another bond for tens of millions of dollars each year.

The GRA was given marching orders from that facility to help the new owners take possession.
For those who still perhaps do not understand just what took place here, I will urge them to pay a visit to the facility. To those who feel that this column is pressing this matter simply because amongst the proposed investment for the new site is the publication of a newspaper, I would urge them to take a drive and see for themselves the size of that facility.

This is a massive complex with huge buildings which today will cost billions to construct. And while the original tender was for only the printing and dyeing factory, the entire complex worth billions of dollars has been leased out to a private firm for a mere sum of $50M per annum, with the lease stretching for an interminable ninety-nine years.

Long after my grandchildren are gone from this world, this facility will legally be in the hands of the investors.

I have no problem with the deal that the investors struck. I myself would love to get such a bargain. However, I feel that the public interest was not adequately safeguarded by this arrangement since the lease fee of $50 M is a pittance. It is a pittance because of the market value of that facility. It is a pittance because of the fact that it is accompanied by a ninety-nine year lease which virtually amounts to a transport.

But it is also a pittance because when you divide $50 million by twelve months, you get a monthly lease fee of just over four million dollars. When you see the size of the facility you will recognize that this is a bargain.

But more importantly, we have not yet explored the more crucial issue of the concessions that have been offered to the investor. We are yet to discuss the fiscal concessions that have been approved for the investor.

The benefits of four million dollars per month in rental can be easily erased by over four million dollars in fiscal concessions each month, given the size of the proposed investment. It takes only a few containers of stock granted duty free concession to total up to four million dollars per month.
The question that must now be asked is what concessions have accompanied this deal. Since the government is insisting that it has nothing to hide and this deal is above board, I urge them to do what the PPP promised to do when it took office in 1992. I urge them to lay this deal before the National Assembly.

But before they do that perhaps the Privatization Unit can make public the fiscal concessions that accompany this ninety-nine year lease. The public needs to know just what waivers in taxes will be enjoyed by the company and how this tallies with the $50M lease to be paid each year.

The President has been very forthright about this deal. He said he was not part of it. I believe him. I also believe him when he said he left the Cabinet meeting when the matter was being discussed. I do not know where he went. But I take him at his word.

It is now time for the Privatization Unit to make known the fine print of this deal so that it can be studied in its entirety. The proof of the pudding, they say, is in the eating.

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Peeping Tom – What concessions went with this deal?

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