PLAYING WITH WORDS

Nov 08, 2012 Features / Columnists, Peeping Tom

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It is time that the President put an end to this play of words that is taking place within the government. If the President is as serious as he says he is about transparency; if he is keen on opening everything up for scrutiny, the least he can do is to instruct his subordinates to when addressing concerns and criticisms, to be clear and not try to obfuscate the issues by playing with words.
There are serious concerns about the viability of the Marriott Hotel project into which the government is pumping millions of dollars.
The hotel is not a public infrastructure project. It is a commercial venture that the government is entering into, in partnership with other investors (yet unknown to the public).
Commercial projects should yield commercial returns for the public investment but there is no guarantee that the government will secure preferred shares in this project. In fact, it is the private investors who are likely to have these preferred shares.
The government has justified its involvement in this project by saying that private investors alone would not have been able to finance this project and thus it was necessary for taxpayers’ monies to be used.
The fear is that when this project is completed, the billions of dollars that the taxpayers of Guyana would have sunk into it would end up being not worth the paper on which it is written since it has been suggested by critics of the project that the syndicated investors would have the first lien of repayments should this hotel run into problems, something that knowledgeable persons have indicated is likely to happen.
If this hotel, as is expected should go bankrupt, it would mean that the syndicated investors would end up owning the hotel while the billions of taxpayers’ monies would go down the drain in paying the debts of the hotel.
The revenue stream of this hotel is highly questionable. Those who understand the business indicate that given the occupancy rates of hotels in Guyana, it makes no good business sense for anyone to put monies into such a hotel, much less to put billions of taxpayers’ monies into this venture.
Even with the revenue stream from the casino and the other entertainment sections of the hotel, not many of the knowledgeable pundits are confident that this hotel can avoid being in the red.
It was therefore shocking to read a report which indicated that the government would be contracting out the entertainment sections of the hotel. This has caused a public furor, with the opposition expressing concern about this development.
The government which had long promised to be open and transparent, has through NICIL responded in a disingenuous way to those concerns by stating that both the hotel and entertainment segments of the business will be owned by the company which the government formed but that the operation of the entertainment section will be outsourced.
The impression trying to be created is that the outsourced private operators of the casino and other entertainment aspects of this hotel will be managed by private companies just as how the Marriot will manage the hotel segment.
The very report from the government indicates that the private operators will be responsible for outfitting the entertainment section which is expected to cost US$ 4 million dollars.  However, the government obfuscates its plans by stating that while the entertainment complex would be privately operated that all investment, income and expenditure will be in the hand of government.
Who does NICIL really believe it is speaking to? Does it really believe that it can bamboozle the Guyanese people with this play on words?
If private operators will operate the casino and other entertainment centres; if these same operators are responsible for outfitting the entertainment complex, then obviously they will control the revenue flow. You cannot ask someone to invest four million US dollars and then you control the revenue from this investment.
In effect the company that owns and controls the hotel will be renting space to those who will operate the entertainment complex. The only revenue stream that AHI will get is for rental.
Those who will inject the four million dollars will run the casino and other entertainment divisions as a business and they will expect a fair rate of return. In short what is being proposed is the outsourcing of the casino.
This will further reduce whatever chances this hotel has of being viable because without the revenue stream from the entertainment complex, the company which owns the hotel will not even be able to pay its operating costs.
Taxpayers’ monies must immediately be pulled from this project. This is a project that will enrich others and leave the taxpayers holding worthless paper.

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