Privatisation only option under IMF programme – Luncheon

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Privatisation only option under IMF programme – Luncheon

Unread post by bimjim » Tue Oct 04, 2011

http://ncnguyana.com/ncngy/index.php/lo ... ells-court

Privatisation was only option for bauxite industry under IMF programme – Dr Luncheon tells court
Tuesday, 04 October 2011

The rationale behind Government’s move to privatise the bauxite industry was explained in detail to the court by Head of the Presidential Secretariat (HPS) Dr. Roger Luncheon, chief witness in President Bharrat Jagdeo’s libel case against Freddie Kissoon and the Kaieteur News.

Defence lawyer Nigel Hughes in his cross examination of Dr. Luncheon at a previous hearing, had asked about the capital investments in the sugar industry as opposed to privatization in the bauxite industry. The questions were rehashed by lawyer for the plaintiff Anil Nandlall who continued his re-examination of Dr. Luncheon today but, was met with objections from Hughes on the grounds that privatization and capital investment were dealt with separately.

Allowed a response, Dr. Luncheon said while the sugar industry up to the 2000s had proven to be profitable, bauxite operations in Linden and Berbice were quite the opposite even as there continued to be a considerable budgetary outlay on an annual basis and, this was long before the plaintiff assumed the presidency. Head of the Presidential Secretariat Dr Roger Luncheon, plaintiff’s lawyer, Anil Nandlall and Ministers Robeson Benn and Priya Manickchand after court adjourned on October 3. He made reference to the International Monetary Fund’s (IMF’s) programme that imposed conditionality for cessation of public funds to the bauxite industry (LINMINE and BERMINE) as a prerequisite to the debt recovery process.

“If we didn’t execute the IMF agreement we would have had no debt agreement and debt relief donors would not do so without an IMF agreement,” Dr. Luncheon explained. For want of capital, the bauxite industry was inevitably exposed to privatisation which Dr. Luncheon said turned out to be successful and, helped the bauxite industry to acquire investments that exceeded the amount acquired for the Skeldon project. The IMF programme was inherited by the People’s Progressive Party/Civic (PPP/C) when it took office in 1992 according President Jagdeo who at the launch of GuyExpo on September 29, noted that Guyana is no longer dependent on such a programme.

“The IMF was invited into Guyana when our country became bankrupt… un-credit worthy (and) we could not pay our bills and we worked our way out of that programme. Today, we do not have an IMF programme when quite a few countries in our region are contemplating getting into a one because of their balance of payment and other difficulties,” President Jagdeo said.

Privatisation policy

Dr. Luncheon also explained the main components of Government’s privatization policy executed by the National Industrial and Commercial Investments Limited (NICIL) to dispose of Government properties, an issue that arose from the cross-examination by Hughes. Hughes objected to the question and plaintiff’s lawyer, Nandlall reminded that he (Hughes) had raised this matter in his line of questioning. The question was subsequently allowed by the judge.

The HPS said that the privatisation unit, working in conjunction with NICIL applied several considerations in the disposal of Government’s assets; these include identification of a ‘privatisable’ entity (one that is deemed unprofitable and had to be subsidised), an entity that needed investment to maintain market presence, and entities that are not strategic and where privatisation would not lead to an unacceptable impact on the national economy. Dr. Luncheon assured that the privatisation process is publicly carried out in accordance with the provisions of the Procurement Act. He explained that a market valuation is done of the assets and positive recommendations from the privatisation board are taken to Cabinet for consideration. Once approved, a public tendering process follows.

This includes an advertisement published inviting bidders to bid for the property at market price. Nandlall then asked how the transaction with regards to disposal of several properties was carried out including for a property to Roraima Airways, Queens Atlantic, National Hardware, Precision Woodworking, John Fernandes Ltd, Farouk Feroze and Roraima Airways. With respect to Roraima Airways, the HPS explained that Cabinet approved for that particular property to be disposed of by sale and a public tender ensued, attracting four tenders all of which were evaluated and Gerry Gouveia was deemed one of the most responsive bidders and was sold the property after negotiations.

The decision was largely influenced by the fact that Roraima Airways owned and operated a business that was adjacent to the property that was sold. On the issue of assets that were acquired by Precision Woodworking, owned by the Bulkan family (another issue that came out in the cross-examination), the HPS said that market valuations were done for all leased properties at the Ruimveldt estate. The lease hold properties were in existence for a long time and they were reviewed and redone and rent adjusted to reflect current market values and in each of these, a clause was put in giving the lessee the option to purchase at market value. Most of these lessees refer to above exercised the option to purchase and NICIL carried out the transactions. Leases were then renewed and in some instances, entities were given the option to buy.

With regards to property acquired by Queens Atlantic, the HPS said that it was leased to a Chinese firm by Sanata Textiles Limited. The lease was subsequently abandoned and despite re-advertisement the asset remained without uptake. NICIL then offered a direct negotiation on conditions under which a new lease could be made for the assets. On this basis, Queens Atlantic acquired a lease with an option to buy once the conditions under which the lease was granted were implemented by the purchaser. These conditions included certain development to the property. Subsequently, over a period of three to four years, those conditions were met and the company exercised its option to buy.

Nandlall also re-examined the issue of the 103.88 acres acquired by National Hardware Limited in Liliendaal. Dr. Luncheon said that a public tender was carried out and the most competitive bidder based on the current price per acreage in that specific area was awarded the property. Nandlall then asked the HPS if in his capacity as Director of NICIL, any asset was purchased by any person of African descent under Government’s privatisation policy other than Standford Soloman, previously mentioned during the cross-examination. Dr. Luncheon responded that NICIL sold property located immediately North at the corner of Holmes and Main Street, Georgetown to Victor Greene.

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