NO MAJOR CONTRACT IN AN ELECTION YEAR

Jul 16, 2011 Features / Columnists, Peeping Tom

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It is a convention that in an election year, the sitting government does not sign any major contracts that can bind future governments. In Guyana’s context, the signing of a contract to construct a hotel which will be branded by the Marriott chain of companies constitutes a major undertaking since it is not a short-term venture but is expected to take about two years for completion. Its consummation ought to await the outcome of the elections.
In a previous election year when the PPP signed an agreement involving the electricity corporation, the then leader of the opposition made it clear that he was not going to respect that decision.
He however ill-advisedly made comments about the investors not being welcome rather than sticking to the script about there not being any major investment deals signed in an election year.
As such, the PPP was able to turn his statements against him and he was soundly condemned for scaring off private investors.
While the construction of a Marriott-branded hotel has long been on the cards, the decision to go ahead and sign the deal in an election year is not consistent with political convention which dictates that a sitting government should not bind any future governments to major deals signed in an election year.
Even though there have been announcements about impending signing of a contract, both the PNCR and the AFC, have not come out and indicated their objection to the sealing of this deal. Both parties are hoping to gain the nod of the electorate in this year’s elections and therefore they will be bound by this deal signed in an election year should they win.
They should have therefore come out and indicated that they will not honour any such arrangement so that the investors in the project can put a hold on their plans and wait until after the next elections to proceed.
But why is it that the PNCR and the AFC are not speaking out about this proposed deal? One reason is that they may have learnt from the fallout from the incident with Hoyte. The former Head of State suffered a loss of confidence from the private sector after his criticisms of the deal involving the electricity company.
Hoyte, who had prided himself as being pro-investor, was painted as being anti- business because of his statements. The two main opposition parties considering this incident may therefore be exercising caution in not coming out against the signing of any major contract this year.
These parties also know that they will have to go to the very private sector for funds to undertake their election campaign. Any adverse criticism of an investment deal can backfire to the detriment of their election coffers. This may be something that they fear risking.
The AFC silence is somewhat understandable. It is a middle-class party which is pro-business. It will affect the image of their party if they are seen as criticizing this deal and calling for it to be halted.  The AFC should however note that what they should be criticizing is not the signing of investment deals but the signing of a deal with long- term implications for the state.
They have already indicated that they are opposed to state funds being used for the hotel. But the AFC has also made a number of silly critics about unfair competition. What is needed in Guyana is a large hotel that will force those small hotels from charging five star rates for one star service. The AFC therefore should not be worried about competition.
But it is clear where they are coming from since some of their supporters and financiers are into the hospitality business and face competition and possible extinction.
The PNCR has said nothing so far about the use of taxpayers’ funds. The AFC has a case .
The funds of the taxpayers should not be used to finance this project. Enough has already been spent in redirecting sewage lines in the areas. Hundreds of millions of dollars, in fact, were spent on this aspect, at taxpayers’ expense, and done by a firm which was originally associated with the project.
There is a real danger in taxpayers’ monies being used. It should not be used. This is a private sector project and the monies should come from the private sector.
State funds should not be used because there is a possibility that taxpayers’ monies can be used to build the hotel while the private investors can cream off all the profits. Thus, there should be no use of taxpayers’ monies.
All the political parties competing against the ruling party should come out and indicate that so long as taxpayers’ monies are used, any future government formed by them will not respect the deal.
The same should hold for the Amaila Falls Hydroelectric Project.
The people of Guyana are spending four billion dollars to build the road and will not receive a cent in dividends from this investment which will benefit the private sector.
As such, the private investors should finance the entire project. If they wish they could ask Guyanese investors to invest just as was done in the case of the Berbice River Bridge where a few select investors were allowed to invest. That project however involved an injection of state funds.
The same mistake should not happen with the hotel that is to be built.
The government has no business in spending taxpayers’ monies on this project and the opposition should make it known, as well, that it will not honour any major investment deal signed months away from a general election.

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