The addition of the Buddy’s International Hotel to the skyline of the East Bank of Demerara is undoubtedly a major development and the proprietor Mr Omprakash Shivraj must be complimented for his perseverance and investment. This property and its aspiration to four-star status will certainly enhance the country’s tourism product, encourage investment and attract development in the East Bank area. In an environment that has been extremely difficult to attract venture capital, the investment of US$8-10M in the hotel business is indeed a bold move.
At the launching of the hotel on Thursday, several speakers without naming any particular media house took exception to criticisms that had been made of the Buddy’s project and the debate that had been generated by the government’s financial assistance to it. Stabroek News has been one of those media houses that have raised queries about the project. We have no regrets about this. And there are many questions that the authorities still have to answer in relation to the Buddy’s project and others.
First, it remains unclear on what basis and how the government apportioned the land on which the hotel was built and the terms of the lease or sale. President Jagdeo has spoken feelingly about the enormous challenge that faced the country once the decision was made that Guyana would be hosting world cup matches and the realization dawned that accommodation would be a major problem. Yet, that exigency must never be an acceptable reason for a mask to be pinned on the face of transparency and fairness in the way the government conducts business. Existing hotels may very well argue that there was no detailed examination of what was available on their properties and whether further investment in their already established operations with the same concessions offered to Buddy’s might not have achieved the intended result.
Second, a thick haze shrouds how exactly Buddy’s and the proprietors of the Casique were chosen to build hotels at Providence near to the cricket stadium. Surely there would have been a number of interested persons. Mr Shivraj has said publicly that he answered the call in an advertisement by the government for persons interested in building a hotel. The public has very little knowledge of such a process and it must have been expedited in great secrecy. Can the government today say how many bids were received for this business, the basis on which they were evaluated, who formed the evaluation committee, the type of due diligence conducted, the bid guarantees that underpinned the process and whether there was a public announcement on the decision? The same questions also relate to the deal with a developer to relocate the National Archives from Main Street to Homestretch Avenue.
Third, the Buddy’s project was permitted to proceed in flagrant violation of the environmental laws of the country. The Environmental Protection Agency (EPA) has had a poor track record thus far of exerting its independence and ensuring that the laws of this country are complied with. Even before the land was cleared, it was the EPA’s mandate to ensure that an environmental impact assessment study was done for the sprawling 250-room hotel before a decision was made on an environmental permit to construct. This was completely disregarded and the EPA would later admit that it was only doing a study on the operational impact of the hotel. The problem with having an administration actively promoting a project of this type is the signals it sends to important but potentially pliable agencies like the EPA. Unfortunately, the EPA did not do its job as has been the case in its dealings with at least one other big-name and favoured investor.
Fourth, in recent months it had become clear that Buddy’s might not meet the deadline to be ready for the games and that funding was a problem. There were not so subtle hints from Cricket World Cup 2007 officials about the jeopardy that Guyana faced if this hotel was not finished on time. Inevitably this again raises the issue about how the investor was chosen and the terms of the arrangement. Was there a contract between the government and Buddy’s setting out the concessions that were being granted, the date for completion and what penalties might be applicable if the investor failed in his construction and financial commitments? Not as far as we can tell. The net effect was that the government had to bail out this prestige project to the tune of $168M – at the upper end of the estimated cost of construction this amounted to 8.4% of the total financing. The government had in effect become the banker of last resort to a project which was a purely commercial undertaking by a private sector businessman. A sound investment of this type should undoubtedly have been able to attract a bevy of financiers – whether via equity or cash – to ease the `bridge financing issues’ which cropped up. Somewhere along the line the financial due diligence for this project disintegrated. We note that the government has also advanced money to the Casique project which doesn’t appear to have even a slim chance of welcoming guests for the world cup.
Fifth, it becomes clearer by the day that promises of various sorts are being made to the investors in these projects which the public is unaware of but which later become the motors for far-reaching legislation. The casino legislation is a case in point. Buddy’s is one of those hotels angling for a casino licence and so apparently would be the Casique Hotel and the Marriott-managed facility which will be located in Kingston. Other properties that may have a genuine case in applying for licences have been conveniently shut out by the arbitrary limit of three casinos per region and effectively the new entrants are being shielded from full-scale competition. How really were these decisions arrived at and why in the face of the widespread public concerns over casinos was the legislation not sent to a select committee as is automatically the case with other bills?
There are undoubtedly other issues which the government should answer in relation to this project and we would have no hesitation in continuing to raise them no matter the discomfort and annoyance generated.
We wish the Buddy’s Hotel well in its inaugural and important outings at the Rio Summit and the Cricket World Cup.
