Govt. sacrifices billions of tax dollars to enrich private partners

Sep 22, 2013 News

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In recent years, the Guyana Government has been pursuing a number of large-scale infrastructural projects.
However, while Government has been putting in large sums of money, it does not control the companies that run these projects.
Rather, the ownership has been inexplicably placed in the hands of the private investors.
Three projects have recently been coming under intense scrutiny. These are the Berbice River Bridge, the Marriott Hotel and the Amaila Falls Hydroelectric Project.
One common personality running through all three is Winston Brassington. It is noted too that all the projects were initiated by former President Bharrat Jagdeo.

Marriott Hotel
The Marriott Hotel is being built by Atlantic Hotels Inc (AHI) which Brassington heads. The final cost is projected at US$58.5M.
Marriott is being funded by a mix of US$12M in equity and the balance in loans. The Government has already provided US$19.5M—US$15.5M by way of a loan and US$4M in equity.
And this does not include the cost of the seven acres of perhaps the most exclusive land in Guyana. Additionally, the government has also spent US$2.7M to re-route the sewerage system for the hotel.
And recall, too, that the US$19.5 M came from the sale of the GT&T shares, the proceeds of which should have gone to the Consolidated Fund.
One question is, “What has Brassington done with the other US$5M received on the first installment and what is he planning to do with the other US$5M due to be paid shortly?”
An unnamed private investor has been asked to put US$8M of the equity/investment money, and for that will own the majority 67 per cent of AHI which will own the Marriott.
The Government for its $19.5 M will get 33 per cent. But here is what Brassington, the sole Government representative in AHI (Marriott) has agreed to: the Government will not receive any interest for the US$15.5M loan and will further be the least of priorities, when it comes to the order of who gets repaid.
No one is clear about the status of the project as most of the Government money has now been spent.
Brassington is busy looking around and talking with a private investor and Republic Bank Limited of Trinidad to help source the balance of the funds required.

Berbice River Bridge
The Berbice River Bridge was constructed at a cost of US$49.5B.  Government was responsible for a whopping 90 per cent of the investment. Yet its financing and control structure was designed for private local companies to reap the benefits.
Government through NICIL, headed by Brassington, contributed the land for the approach roads for the Bridge and also paid US$0.5M in compensation to displaced residents. The government also built the road for US$8.5M, and invested US$5M. The initial private investors only contributed US$1.6M.
NICIL is entitled to receive over US$0.5 M each year on its investment. NICIL, chaired by Dr. Ashni Singh and headed by Brassington, has told the Bridge Company not to bother to pay.
In other words, the State loses over US$0.5M ($100M) each year in dividends foregone.
The Government does not have a single member on the board of directors for the Berbice Bridge Company. The Government has also agreed never to collect a penny in taxes from the Bridge Company or any of the private investors. It is like Queens Atlantic all over again.
In this case Brassington and NICIL have been at the forefront of a project which has resulted in what has been said to be one of the most expensive toll charge in the world.

Amaila Falls Hydro Electric Project
The Amaila Falls Hydro Electric Project was also designed in the same vein. The government in its official pronouncements had said the US-based project developer, Sithe Global, will own the majority shares in project.
Like the case of the Marriott, Sithe Global was supposed have majority ownership of the project by investing US$157M as an equity partner.
Leaked confidential documents, however, have since revealed that the government had in fact committed to invest the same amount– US$157M — but was getting a minority share (40%).
Sithe Global was going to be repaid its investment annually but would still control the company; even when its investment was down to one dollar.
Government moved to Parliament to increase the debt ceiling so that it could guarantee the loans by way of the Power Purchase Agreement. In essence, Government would have invested US$157M, guaranteed the loan from China Development Bank, and allow an illegal monopoly situation in electricity.
And once again, neither Sithe Global, the China Development Bank, the IDB, nor any of Amaila’s contractors would have paid any taxes for the full twenty-five years, inclusive of the construction period.
Another feature of the agreements is what Chris Ram on his website last night described as the “Brassington Clause.” He said that “The public in Guyana must know nothing about the transaction because Brassington says the private investor must be protected.”

 

 

 

 

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