Signing of Marriott contract before feasibility study done…

Mar 25, 2015 News

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This outrageous act of disrespect must be dealt with condignly – Greenidge

A Partnership for National Unity (APNU)’s Shadow Minister of Finance, Carl Greenidge, says that the fact

that the Marriott Hotel deal was signed before the feasibility study was conducted represents “an outrageous act of disrespect for the nation”. He said that it is a matter that needs to be dealt with condignly.
The disclosure was initially made by Chartered Accountant, Chris Ram on his blog site, chrisram.net on Monday. Ram urged that final payments to the Chinese contractor of Marriott Hotel, Shanghai Construction Group (SCG), be withheld until a forensic audit is done to determine whether the firm complied with local tax and other obligations.
The accountant was also highly critical that NICIL’s Head, Winston Brassington, and Government signed contracts for the hotel since in October 2011, but only had the critical feasibility study done by a Miami-based consulting firm in September 2012. The feasibility study is the assessment that tells whether a project makes economic sense.
It is unclear what basis Government used to determine the project was feasible.
Greenidge agreed with Ram’s contention that a technical feasibility study is mandated prior to the start of construction so that the goals of the project can be matched with the most appropriate technical options for achieving them.
Ram believes that the Marriott feasibility study was typical of Brassington’s usual response to concerns about the feasibility of any project, “get a study done by someone to whom you dictate all the favourable parameters.”
NICIL is the controversial Government-owned company in charge of managing state assets and investments,

while Atlantic Hotels Inc. (AHI) is a holding firm which is overseeing the hotel’s construction and its subsequent operations.
Government has plugged more than US$36M of taxpayers’ money held by NICIL into the construction of the Marriott Hotel without the authority of the National Assembly.
In support of Ram’s points, Greenidge said that the feasibility study by HVS, dated September 2012, estimated that the occupancy in the first year of operation would be a mere 50 percent, and in 2018 it would only be 62 percent.
“This is a relatively low rate of occupancy and with the low rates enjoyed by existing hotels it is not surprising. We need to recall that Hotel Tower, centrally located and one of the best established facilities in the country, was closed recently. The Park also no longer exists. The construction has been estimated to cost US$58.5 million, and now it appears that we as taxpayers will bear most of that cost, since the jumbie investors from Asia have not been found by Messrs Brassington and (Minister of Finance Ashni) Singh. The balance of the financing which will come from Republic Bank will have to be repaid before any other creditors, including the Guyana taxpayers via NICIL.”
The former Finance Minister said that in a situation where there is excess capacity in terms of rooms, it is amazing that the state would give up taxes in order to encourage a new hotel.
“We know that the Government’s judgment on these commercial ventures is

flawed. When they provided monies to fund the completion of the construction of Buddy’s Hotel in Providence, they explained that it was needed both for its size and quality. Now they are arguing that it is not of the requisite quality. Just behind that hotel is another, Cacique, where construction is incomplete and the venture is in suspension partly due to Government’s malice.”
According to Greenidge, the same malice is associated with the Marriott which is intended to bring down the nearby Pegasus Hotel because former President, Bharrat Jagdeo, and his “cronies” have a problem with the owner, Robert Badal.
“These personal vendettas and idiosyncrasies could never be an acceptable basis for economic policy-making and are likely to prove injurious to taxpayers and the Guyanese public as a whole. In a situation of excess capacity there can be no justification for providing tax benefits and subsidies to investors to build more hotels.”
Greenidge believes that the reason why the Government is involved in the construction of the hotel is also questionable. He said that the desirability of establishing standards is obvious but the argument cannot be persuasive in the circumstances where a Government has already been directly funding hotels.
The APNU official believed that the profitability of the hotel is in doubt, primarily because the facility, like the multi-billion Amaila Hydro-Electric Project, starts off with capital costs well above the norm.
Greenidge said that for all these reasons, in the first quarter of 2012, the National Assembly required the person who chairs NICIL, the Minister of Finance, Dr. Ashni Singh, to report on its stewardship of the financial resources under its control. But that report was never submitted.  “Meanwhile monies continue to be spent on this white elephant (the Marriott Hotel). The Assembly will need to do something about this contempt the Minister has shown for its decisions,” he added.
The APNU Executive Member said that it is clear that the Kingston Hotel was built on the foundation of spite and gifting millions to friends and cronies.

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