US$138M CJIA Expansion…Govt. will not honour “sweetheart tax privileges” PPP granted contractor

Mar 14, 2016 News

The review of contracts signed under the previous administration may be seen by some critics as a slow process, but Public Infrastructure Minister, David Patterson assured that it is a procedure that will be fulfilled effectively.
To support his position in this regard, he made reference to the fact that Government has made the bold move of reviewing the contract of the Cheddi Jagan International Airport granted to China Harbour Engineering Corporation (CHEC). The now amended contract he says removes unfair practices and policies which were signed in the deal.

Minister of Public Infrastructure,
David Patterson

Patterson said that while some of these changes have already been explained to the media, he highlighted that one “sweetheart tax privilege” that was removed was the arrangement for the former Ministry of Public Works to pay all customs duties for CHEC, should any of its requests be refused by the Guyana Revenue Authority (GRA). This was enshrined in the initial US$138M Contract.
In a brief but impassioned statement, the Minister of Public Infrastructure asserted, “The coalition administration is determined to regularize the system of how contracts were granted and how they were crafted under the previous regime. But we want to ensure we do this the right way. In addition to this, when we review contracts, Government, I assure, would not follow through with honouring sweetheart privileges granted to contractors under the past regime. It simply can’t because it would only foster an unfair, bitter and lopsided environment, the very kind that we are making moves to destroy.”
Several senior Government officials who spoke with Kaieteur News yesterday also said that when they served in Opposition, the “sweetheart tax privilege” between CHEC and the former regime was a provision they objected to and found the removal of the clause to be significant.
The contract which has been highly criticized for its numerous concessions to the Chinese Contractor was inked on November 10, 2011, days before the then president, Bharrat Jagdeo demitted Office.
According to the document which was secretly inked in Jamaica, all Goods and Equipment imported by the CHEC into Guyana shall be exempt from all taxes, duties, royalties and fees imposed by the Guyana Governmental and statutory authorities.
If the exemption is not granted, however, the customs duties payable and paid shall be reimbursed by the Ministry of Public Works.
That Ministry under its obligations to the Chinese Contractor—who is now woefully behind schedule with the expansion project—has also agreed to endorse the necessary exemption documents prepared by the Chinese Contractor for presentation in order to clear Customs.
Another glaring aspect of the contract which has been heavily criticized for being lopsided in favour of the contractor undertaking the expansion programme is the fact that Government has agreed to supply and deliver free of cost, more than 500,000 truck-loads of the sand required for backfilling of the extension of the airport runway.
According to that country’s regulatory body, CHEC, since in 2014, has been illegally quarrying hillsides on lands the company purchased in that area, without approval from the National Environment and Planning Agency (NEPA) and other entities.
Minister of Finance, Winston Jordan had also revealed that more than 70 percent of the money for the project had already been handed over to the contractor and expended.