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Kaieteur News
Kaieteur News Printed and Published by National Media & Publishing Company Ltd. 24 Saffon Street, Charlestown, Georgetown, Guyana. Publisher: GLENN LALL Editor: Adam Harris Tel: 225-8465, 225-8491. Fax: 225-8473, 226-8210
EDITORIAL
Value for money Value for money is always a talking point. The government, ever since Bharrat Jagdeo was president of the Co-operative Republic, insisted that it had the people at heart and was ensuring that it got value for money for every cent of the tax dollars that it spent. At the time the nation was complaining about the slipshod work provided by people contracted by the government to undertake works. These works were either road repairs or actual road construction. Before the intended beneficiaries knew, the works had deteriorated to a condition that was even worse than when the project started. It was the same with some other constructions. In the end, to prove that it was serious, the government created a situation that was intended to allow the beneficiary community to monitor the works. Of course there was a loophole. When the people monitored the works they had no way of reporting their findings. The system was such that there was no one who could take executive action; people complained to no one and in the end the shoddy work continued. Of course there was a difference when the media turned its attention to the poorly executed projects. The poor work was there for all to see and more often than not, there was action. The result was that people soon realized that if they wanted to get value for money, all they had to do was to seek the intervention of the media. However, there were those projects that were larger that the people that anything the wider population could monitor. The Skeldon Modernisation Plant is just one. For starters, the people learnt that they were spending US$200 million, eh most money Guyana ever spent on a project to ensure that the country become competitive in the world of sugar production. The people were not asked to monitor the construction so they were in no position to determine whether they were getting value for money. There were engineers representing the interest of the state; these were the people who would ensure that the nation got value for money. They failed miserably. News of the poor work began to surface when workers on site spoke of the trial runs that were disastrous. The nation soon learnt that this modern factory demanded more cane to produce a ton of sugar than the century-old factory that was being mothballed. Then came news that parts had to be changed even before the factory had gone into operation. Deadlines came and went with no change and suddenly the nation found that it had spent billions of dollars but was not getting what it deserved. The government which had promised value for money had failed to deliver on its promise. One could argue that the paucity of skilled in the people would always result in the country being unable to demand value for money from those foreign contractors. The people put to monitor the works are either unable to properly assess the project being undertaken or are easily distracted that they lose track of what they are supposed to observe. Things have reached the stage where even local contractors set out to boost their profit margin and so deny the nation value for money. Some of them argue that corruption is the prime factor for their actions, and not because they are corrupt. Many are victims of officials who demand money for the award of the contract. This reduces the amount to be spent on the contract and automatically cuts into the profit. The result? It goes without saying. It is surprising that many of the tall structures that defy the building code have not come crashing down. Indeed, we have seen complete walls of buildings come crashing down. There is another aspect of the government itself contributing to denying the people value for money. This is done in many ways, not least among them, paying for pharmaceuticals to a favoured importer. Yet we keep hearing about value for money.
Thursday July 25, 2013
Letters... Where your views make the news
The Amaila deal will cost US$2 billion; it cannot be supported in its current form DEAR EDITOR, Hydro Power in Guyana is truly a visionary idea; no stakeholder can question that. Thus all the calls in support of the “Amaila” deal, especially from the business community, must be recognized from that angle and welcomed. However, the people cannot support this deal blindly since it has a direct financial impact on their lives over the next 20 years and even
doorstep. So as we are in the season of begging, we beg all the players - Stop it, sit down, talk, give some and get some! We want to reflect on Cde Cheddi's words “Winners cannot take all” and “we do not want to dominate but we shall not be dominated”. Let's get down to the facts. This deal is between the Government and Sithe Global Power (Sithe) and we
(20 years at US$100 million per year) will provide a guaranteed 20 percent return on Sithe's equity investment of US$150 million (add up to return on their investment US$601 million) as well as repay the principal on the debt plus interest. The debt being borrowed is US$584 million (Chinese debt – US$484 million and IDB – US$100 million). [see table] The reality is that this
have been lied to by the PPP/C Government and thus there is now a credibility vacuum on the issue at hand. We call on the majority in Parliament to use their instrument of authority to demand that the lead negotiator on this deal, Mr. Brassington, recuse himself from any further dealing with the electricity sector. This will provide the opportunity for seamless renegotiations of this deal to
beyond. The numbers must be scrutinized. That is exactly what a group of professionals did over the last few months and now choose to share our findings. Many questions remain and if only the private sector “doyens” act as the facilitators between those with questions and those with answers, to remove the areas of doubt from the decision makers, this deal can become more “trustworthy”. All are involved and if this “Amaila Deal” meanders into another Skeldon Sugar Factory - all will be consumed, since it is bigger than the size of our economy. For this deal to survive there must be more objectivity and rigorous analysis driven by real facts. If one is to carefully observe the utterances from some Government Ministers and the President, their satellites in the private sector and even an Islamic religious leader, it is all cursory emotive outburst driven from a Personal Prejudiced Perspective Collectively. This is most unhelpful. There is no place for political sound-bites, as it aggravates a climate that requires mature minds. The PPP/C had better wake-up since their regrettable action of labelling Guyanese patriots as “terrorists” and “anti-national” is a contributor to an atmosphere of war. In a war, business cannot be done sensibly and Guyana will never win. Today we all are at failure's
will show with evidence why this deal cannot be supported in its current form and why we must engaging in some serous re-negotiations with the developer (Sithe). Sithe owns 60 per cent of the special purpose vehicle (SPV) that was designed to build and execute this project. The Government owns the remaining 40 per cent. The name of the SPV is Amaila Falls Hydro Inc (AFHI). The central component of this entire deal is a Power Purchase Agreement (PPA) between GPL and AFHI. The project is structured as a 20-year “take or pay” PPA through which GPL will purchase 100 percent of the generation capacity for an annual payment of approximately US$100 million. This US$2,000 million
PPP/C Government continues to mislead the people that the true cost of this project is US$834 million; this is a fraction of the truth. Mr. Ramon Gaskin, former technical advisor to President Cheddi Jagan and former Chairmen of GEC (GPL) has done his duty to Guyana, he has called the PPP/C out on this US$2 billion figure. The truth remains that this deal is costing the nation US$2 billion - sourced from the IMF (page 35 of h t t p : / / w w w. i m f . o rg / external/pubs/ft/scr/2011/cr 11152.pdf). As we unpack this deal, we find it is overpriced and will result in the cost of electricity increasing if pursued as currently structured. Our financial model is absolutely clear on this issue. This means we
make it feasible and beneficial to the Guyanese nation. Failure to allow for independent financial interrogation of this Deal will make it almost impossible for the majority in Parliament to support any increase in the debt ceiling; unless they want to face the wrath of their constituents. To prove that this deal has to be re-negotiated we ask the following questions. 1. Why is a sum of US$40 million being charged to the Guyanese people for “additional works” on top of the US$517 million that was quoted by the Chinese Contractor, when we already have US$26 million assigned for “contingency cost”? The Chinese Contractor has quoted a figure of US$517.1 million to build (Continued on page 5)
A new global order is needed worldwide
DEAR EDITOR, The economic and financial crises that have gripped a number of western countries have demonstrated in no uncertain terms that the neo-liberal model of development has failed to address in any fundamental way the issue of poverty and human misery. This essentially is the message that Pope Francis is bringing to the peoples of Brazil and the world as a whole, during his visit to Brazil shortly. The market model to development has resulted in an ever widening gap between the rich and the poor. People are poor not because they are lazy or born poor, but basically because the economic and social structures in a marketled environment militate against them and limit their prospects of development. As the Pope correctly observed, an entire
generation of young people in several western economies are unable to find gainful employment and are therefore condemned to a life of unfulfilled expectations due to no fault of theirs. What the world needs is a new and enlightened approach to development in which people and not profits are placed at the centre of all productive efforts. In other words there is need for a new global human order along the lines suggested by Dr. Cheddi Jagan. The world has an abundance of resources to provide a decent life to all of its inhabitants but it is the skewed nature of the distribution of those resources that is responsible for the mass hunger and deprivation that afflicted so many millions of people globally. Hydar Ally