Privatisation of sugar estates
– in talks with unnamed consortium of Guyanese/Indian/Ghanian investors
Government’s privatisation of three sugar estates has progressed to the point where PriceWaterhouseCoopers (PWC), which is spearheading the process, believes it can conclude a deal with yet unnamed investors for the Rose Hall estate by next month.
This was revealed by PWC Managing Director Wilfred Bhagaloo at a press conference called by NICIL on Monday. According to Bhagaloo, Rose Hall received the most interest from investors.
He revealed that negotiations with a consortium of investors from Guyana, India and Ghana have reached an advanced stage. Bhagaloo spoke of a meeting he had with Cabinet, in which he was asked by various Ministers for updates on the privatisation process.“I indicated then and my position remains the same, that we’re likely to have a conclusion on the privatisation of one of the estates by the end of July. And that by the end of November, we’ll have a better fix on when we’ll be able to privatise the other two estates.”
“At that meeting, I indicated that I’m hoping, and I can only hope because negotiation are delicate and many things can happen, that we’ll have the privatisation of Rose Hall. We have progressed quite nicely with the proposals, but nothing has happened as yet. We’re now sharing our draft proposals with their legal team and we’ll see what their legal team’s response is.”
Bhagaloo stressed that they are privatising these estates on the basis that the new private owners will remain in the sugarcane industry. He also said that due to confidentiality agreements and the delicate nature of negotiations, he would not be naming the investors.
Meanwhile, Bhagaloo complained of challenges being faced, including the question of the Private Sector competing with public. Other challenges, he noted, included a lack of information from the Guyana Sugar Corporation.
“The first challenge it created, are these the least profitable of the estates. The second question was, why are you privatising these three estates and not the others. The third challenge it creates is how do you ensure you have an environment where Private Sector can compete with public sector for scarce resources.”
“And those scarce resources could mean access to markets. Access to cane, access to people, access to logistics, transportation. So those are issues we have to resolve in the privatisation process. My opinion, we are proceeding quite nicely despite those challenges.”
Meanwhile, NICIL’s Special Purpose Unit (SPU) Head, Colvin Heath-London explained that with the current political climate, other investors thought it best to wait before making their pitch. However, he said that NICIL has since re-engaged these investors, in a bid to get them to submit their proposals.
At his post-Cabinet press briefing, Director General of the Ministry of the Presidency Joseph Harmon had said that because the valuation process was lengthy, they now have to re-engage persons and companies that had initially expressed interests in purchasing the factories.
“You had interests by several companies and because [the valuation] took a little while, some of those interests have waned and so we have now to re-establish contact with some of the parties who’d expressed an interest in the first place. So that is going on and that’s a very active issue right now,” the Director General at the MOTP said.
During that meeting last year, among the areas the bidders had concerns about was the state of the equipment and factories. But a year ago, Government had secured a $30 billion bond through commercials banks both in Guyana and the region, as part of the diversification initiatives.
In May 2017, Government announced plans to close the Enmore and Rose Hall Sugar Estates, sell the Skeldon Sugar Factory, reduce the annual production of sugar, and take on the responsibility of managing the drainage and irrigation services offered by GuySuCo. Subsequently, in November of that year, GuySuCo announced plans to retrench 2500 workers by the end of that year. That number increased substantially and ended up being over 7000.
Government then established the Special Purpose Unit (SPU) under the National Industrial and Commercial Investment Limited (NICIL) to take over the divestment of GuySuCo’s assets that were earmarked for sale. The SPU recruited PricewaterhouseCoopers (PWC) to conduct a valuation of the assets to be privatised and divested. That process was completed and the Unit had met with some of the bidders last October.
Source: Guyana Times