Five bids for sugar estates

Nov 03, 2018 News

DDL opts out after “intense deliberation”

The Special Purpose Unit of NICIL has released a list of five bids that were submitted for the sugar estates of Enmore, Skeldon and Rosehall. PricewaterhouseCoopers (PWC) closed off the bidding process for offers on the estates on October 31 last.

Demerara Distillers Limited (DDL) was expected to submit a bid for the Enmore sugar estate. However, according to a release, the company announced that intense deliberation led the company to backpedal on that consideration.

The company’s primary reason for considering an offer was because of its need for molasses, of which, the company experienced a shortfall after the closure of the three GuySuco estates, the release stated. DDL refused to submit a bid because it could not find a model for the Enmore estate that would fit its current investment and development strategy, in-keeping with the information memorandum governing the bidding process.

PWC’s managing director, Wilfred Baghaloo, said that he was appointed “to oversee certain aspects of the privatization” of the three sugar estates. Baghaloo oversaw the beginning of the marketing period in July last. This process involved the placement of advertisements in media publications in Guyana, Jamaica, Barbados, Belize and Trinidad, since those Caribbean markets comprise companies in the business of sugar production.

For the estates, PWC’s San Francisco team is in the process of doing a business evaluation, which is based on future cash flows and historical earnings, and an assets valuation, which will be based on the market price of individual assets driven by age, functionality and manufacture type, among other valuation criteria.

Baghaloo and his team intend, prior to the evaluation of each offer, to determine whether the bid proposals are in-keeping with the terms of the Information Memorandum that they were provided with.

He noted that a pre-bid meeting was held on September 25, 2018, where he explained the evaluation process for the applications; “a technical proposal will carry 70% of the score and the remaining 30% will focus on the price (valuation) and economics to country”. The technical assessment will consider the financial capacity of the bidder, its experience in the sugar industry, quality of corporate governance, quality of management, extension programme for cane farmers, timing of attaining full capacity, quality of development plan including financial projections, and the linkages the plan proposes with and support of other industries in Guyana. The financial evaluation will consider the degree of positive contribution to the physical budget, of the present value of the offer and the future economic impact, including taxation.

Shawn Persaud, Privatisation Specialist of NICIL, said that the bids will be considered on the premise that they intend to utilise the estates for works in the cane industry, not limited to sugar, This, he explained, is because it is hoped that the successful awardee(s) of the leases will re-employ the skilled workers who were laid off after those estates were closed.

The entire evaluation process of the offers, set to begin in a week, is intended to be completed in about 45 days, according to Baghaloo. After that, PWC will make recommendations to the steering committee and NICIL, who will, in turn, make recommendations to Cabinet.

Baghaloo said that the government could reopen the bidding process if it is unsatisfied with the current bids or has not found any of the current bids suitable. So far, PWC has received requests to extend the process by three potential bidders.

The estates, after the selection is done by Cabinet, are expected to be leased for 25 years, with an option to renew.

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