WATCH THIS SALE CLOSELY!

Jul 12, 2009 Features / Columnists, Peeping Tom

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Hardly a murmur, except from this columnist, was uttered when the government first announced that it was proposing to sell its 20% share in the Guyana Telephone and Telegraph Company. Through this sudden and unexpected announcement the government was testing the waters to see what would have been the reaction to this inexplicable decision.

When the Hoyte administration privatized the former State-owned telephone company, it did so in one of the more controversial deals ever made in this country. The then government however retained a 20% stake in the company which gave the government very little influence over the management but which allowed the government to at least have a valuable financial interest in the Guyana Telephone and Telegraph Company.
The decision to sell these lucrative shares made no sense at all. The Guyana Telephone and Telegraph Company is one of the most lucrative companies in Guyana. The people of Guyana, who own one-fifth of that company, may not be gaining any appreciative dividend, but this is in part due to a tax dispute which is being heard within our courts. Even so, the government needs to examine the value of these shares in the context of impending liberalization of the telecommunication sector.

With liberalization imminent, the telecommunication sector will explode and that 20% share will become a treasure chest. The Guyanese government should not be selling it now, but should be looking at the future benefits which will accrue after liberalization.
The company from all accounts will continue to make money and with a guaranteed rate of return, the people of Guyana are expected to continue to gain substantial dividends in the years ahead. Why sell these highly profitable shares? What is the alternative investment? Another CLICO?
This proposal to sell has nothing to do with investing the proceeds of the shares. It has to do with this new-found obsession of the government to sell everything that is in sight before the 2011 elections. It is a wild, reckless exercise which is being undertaken and which needs to be protested.

Why sell these shares? It makes no sense. It is not as if the government is losing money by having these shares. Why sell these shares now? If the government is interested in pressing for liberalization of the telecommunication sector, it is shooting itself in the foot by opting for liberalization of the sector at this stage when it is supposed to be in negotiations with the telephone company to break the monopoly.
The proposal to offer the telephone company the first option on the sale of these shares is self-defeating and ill-timed. If the telephone company accepts the offer, it effectively means that they own the entire company and this strengthens their hands in the negotiations with the government.
On the other hand, it may well be that the decision to sell the shares with a first offer to the telephone company is a result of the outcome of the negotiations with the utility. If the sale of the shares is part of the deal that the government has made in order for the telephone company to cede their monopoly rights, this would be a highly unfortunate decision and evidence of a poor deal being negotiated on behalf of the people of Guyana.
There is growing suspicion that the decision to sell these shares is separate from the liberalization process. Predictions are being made as to whose hands these shares will end up in. Since these shares are lucrative and will most likely cost hundreds of millions of dollars, there is speculation that the shares will end up in the hands of a powerful local conglomerate which recently struck the deal of the century with the government.

So who will end up with these shares? Certainly it will not be the poor people of this country; it will not be the workers of Guyana; it will not be the trade union movement. It is doubtful also whether these shares will be split up in small tranches and sold to local investors. Most likely these shares will be offered in block to a rich powerful investor or grouping.
The government of Guyana should not be allowed to sell these shares as it pleases. This would be against the Privatization Policy Framework Paper (PPFP) which was so violently assaulted in the divestment of the Sanata Textiles Mills.
These shares should be sold through a process consistent with what is outlined in the PPFP. These shares are not the property of any official of the government to do with as he pleases. They are the property of the people of Guyana and are supposed to be disposed of in manner that secures the best deal for the people.
Unfortunately, the track record of the Jagdeo administration when it comes to the disposal of public assets leaves much to be desired. The Jagdeo administration has disgraced itself by its recent privatizations, a process which has been riddled with controversy and scarred by a lack of transparency.
The Jagdeo administration should not be allowed to sell any more State property. It has proven itself incapable of securing the interests of the Guyanese people in these deals.

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