The Private Sector Commission (PSC) has submitted a proposal on its interest in the acquisition of the Enmore, East Coast Demerara sugar estate, sources say.
“We have made a proposal, through the PSC to government, showing our interest in privatizing one of the estates,” Chairman of the PSC, Eddie Boyer, told Stabroek News when asked on Saturday.
“In our proposal we indicated that there should be a credible body to ascertain the values for the estate property, lands and other assets,” he added.
But even when probed he would only confirm his organisation’s submission of a proposal for an estate but would not specify which it was.
However, reliable sources have told Stabroek News that the PSC recently made a proposal to government about its interest in the managing of the Enmore estate but will await the valuation of assets process before engaging further. The proposal would be the first from any major local body to undertake the running of a sugar estate.
Under its plans to “scale down” the Guyana Sugar Corporation (GuySuCo), government has outlined a scheme to consolidate its operations to three estates with three factories that would produce sugar for domestic needs and foreign markets, while divesting the company’s remaining assets, including the Skeldon Estate. Following the closure of the Wales factory at the end of last year, there are plans to close the Enmore and Rose Hall factories this year.
Recently, the Special Purpose Unit (SPU) of the government’s holding company, NICIL, announced that all of GuySuCo’s assets will be valued by an international firm and a prospectus completed by the end of January next year.
It was the Head of the Special Purpose Unit, Colvin Heath-London, who informed through a press release that the selected tender process for an International Financial Services Provider had closed.
The SPU’s plan comes in an effort to gear up for privatization and/or divestment of sugar estates.
The SPU said that selected tenders were invited from Pricewaterhouse Cooopers, Ernst & Young, Deloitte, and KPMG to provide services to the SPU as International Financial Services Provider and that all four accounting firms had responded.
It is expected that sometime next week the firms would be notified as to the winner and work should begin shortly after with the valuation of the assets and the preparation of a prospectus to be completed by the end of January 2018.
The selected firm’s scope of works would be to undertake the valuation of all assets under the control of GuySuCo, in addition to other advisory and financial services.
Boyer said that the Private Sector Commission agrees “wholeheartedly” with the decision by NICIL to have an international company value GuySuCo’s assets and explained its reason.
“We are happy that this is a position taken by NICIL. You have something credible that you can go internationally with because you are selling it internationally. You have globally recognized and trusted firms, PWC, Deloitte, Ernst & Young and those bidding, now if you have people like this doing something like the valuation of your assets it becomes more credible to an international market that you are trying to attract,” he said.
Asked if he personally or the PSC feels that local accounting firms, such as Ram and McRae or Jack A. Alli and Sons for example, are capable of undertaking the tasks set out in the tender, he reiterated that it comes down to demonstrating to a global audience you want to attract that you have firms they are familiar with and have found credible.
“It is not about capable. If government sees it fit to bring an international body, to do the valuation nothing is wrong with that. If you take a local firm, for example as you say Ram and McRae, it might end up with one side of the house saying it is good and the other that it is bad. You don’t want the politics,” he posited.
“But when you get an international firm, with no ties to anyone and one that is known to be impartial and professional, nobody will question the integrity of it. We will have this whole international exposure where we can now tender it out. In other words, we are looking at local values but there is an international flavour, an international value that is there also,” he added.
However, Boyer stressed that while the PSC has supported the initiative for an international firm to do the valuation, the organization has registered its disquiet at the plan for closure of estates countrywide and will remain vocal the way it was when the Wales Estate was closed.
He said that the organization still feels that the sugar industry in Guyana is a viable one if properly managed and it is for this reason that the PSC proposed to take over a privatised estate.
“We are hoping that government would see value in this, (the PSC’s proposal) and not go the route of closing the estate as was the route prior with Wales and for which the private sector had objected to. We and other sister organizations have already stated our views on this and it remains,” Boyer said.
“We believe that all estates can be viable if they are managed properly,” he added.
Following the announcement of estate closures, the PSC and other private sector bodies urged government to hold off on its plans and offered their “considerable experience” to explore alternative options to sustain the sugar industry.
Noting that the sugar industry remains the second largest employer and the main foreign currency earner, the private sector organizations said that it would be sad to lose the sugar industry and realize five years later that this would have been a success story. They reminded that the sugar industry has played a significant role in the overall economy of Guyana since being nationalized in 1976, with GuySuCo’s role having expanded to include providing drainage and irrigation for many communities as well as health services.
It is that success story that the PSC hopes that government would give the local business community a chance to show.
Asked if government acquiesces to its request and privatizes an estate to the PSC just how it plans to manage it, Boyer said that at this time he did not want to go into detail since it was at the consideration stage.
Nonetheless, he gave a preview into what would be the PSC’s startup process. He said, “We will take that proposal to interested parties and I mean local PSC businesses to more or less finance and give a full perspective. We can’t give values because they have not yet given us that. We can make this work and we need the opportunity to demonstrate this.”
“We are totally against closure of estates and the sugar industry but not privatization. We are definitely supportive of privatization or private-public partnerships which we know if managed correctly will most definitely prove viable,” he added.
NICIL’s Special Purposes Unit Head has said that he believes that “there is a future for sugar in Guyana, and that sugar production must be protected and remain part of the economic mix in the economy.” He added that, “how sugar is protected depends on a combination of options for the existing assets involved in sugar production.”
Heath-London has pointed out that among the various options being considered are privatization and diversification. “The SPU is interested in companies, both local and international, that could integrate the production of sugar into their existing operations and product mix”, Heath-London said. He added that “companies that are in rum production, other beverage manufacturing, and food processing, for example, would be ideal as potential operators of some of the current GuySuCo assets”.
The position being taken by the SPU is that all of what are considered GuySuCo assets are really national assets vested in the control of Sugar Corporation. As such, while factories could be sold to potential operators and investors, lands will not be sold but could be leased so that they remain the state’s property.