NICIL hoping for sale of sugar estates by early next year, Chairman says -briefing held with investors
-briefing held with investors
With PricewaterhouseCoopers (PwC) having completed its valuation of the four GuySuCo estates that are up for divestment and potential bidders currently analysing the findings, the National Industrial and Commercial Investments Limited (NICIL) is hoping that by the end of first quarter of 2019 all the estates would be sold.
“PwC has finished their valuation and the information memoranda sold to interested companies, who now have up to October 31st to submit their bids,” Chairman of NICIL Horace James told Sunday Stabroek in an interview.
James said after the deadline for the submission, an evaluation process would be undertaken. After the bids have been submitted and evaluations completed, it will be Cabinet that will make a final decision. “PwC would give the score, because they will use a scoring system for the business plans as they evaluate them in terms of technical and financial aspects and that sort of thing. They will look at the bids, score, make their evaluation and recommendations but we still have to submit to Cabinet,” James explained, noting that Cabinet will make a decision on the information that PwC and the steering committee submits.
“I hope we are talking early next year. Yes, I hope by then [the end of February] that we would see them sold off,” he added, when asked about an expected completion date for the divestment process.
The deadline for the purchase of the information memoranda (IM), which became available for purchase on August 15th at a cost of US$1,000, was last Friday. Buyers have an interactive portal set up to assist them with clarity on the estates up for sale. The IM, also prepared by PwC, details the asset registry and land inventory for each estate, NICIL has said.
Saying that the Guyana Sugar Corporation (GuySuCo) was unprofitable, the APNU+AFC government began its restructuring of the company at the end of 2016 with the closure of the Wales Estate, which is among the four now on offer. The others are Skeldon, Rose Hall and Enmore.
Government has established a Special Purpose Unit (SPU) within NICIL to spearhead the divestment and privatisation of the estates and other GuySuCo assets.
PwC, which was contracted by the SPU last year, began doing valuations of the assets of GuySuCo in order to secure prospective investors.
Government has said that it has so far received over 70 Expressions of Interests for the purchase of the estates from companies around the world. Some companies have submitted expressions outlining that they were interested in buying all of the estates.
Facilitated by NICIL, the SPU and PwC on Wednesday held an interactive session for potential investors at the Marriott Hotel in Georgetown.
However, only about 17 companies participated at the session. James was not worried about the number since it did not necessarily reflect those who would have purchased the information memorandum. He reasoned that cost of travel to Guyana and the time availability for the one day event might have also been factors.
James said, “We had a meeting for potential investors and if they [wanted] any clarifications on the document, they could ask there. With the purchase of the document, those persons now have access to what we call a virtual room, a kind of library where they can get all kinds of information. If questions are asked by one company, we give the answer to not only that company but to all, without naming who asked of course, so as to have it
open and make it clear to as much persons as possible. The information memorandum itself is to ensure a transparent process.”
He added, “It was a good session and they had to sign a confidentiality agreement when they [got] the information memorandum. We explained the document, also the scoring system that will be used in the evaluation and we had some questions about that. We had good feedback from those who bought and this was done in an open public forum where whatever you give to one, you give to all and that is the same with the IM.”
In an advertisement that NICIL has been running for months to lure potential buyers, it offered general information from the IM on the Skeldon, Enmore and Rose Hall estates.
As it pertains to the Skeldon Estate, highlighted as one of its major features is “1,750 hectares of freehold land, with 110,000 tonnes sugar capacity.”
Questions might be raised about the declared capacity of 110,000 tonnes, which has never been met since the company went into operation in 2009.
Controversially built by Chinese company CNTIC, the US$110 million Skeldon factory never got anywhere close to the annual figure of 116,000 tonnes despite costly interventions several years ago by a South African firm. The failure to attain a grinding figure of 350 tonnes of cane per hour and 116,000 tonnes of sugar per annum put the then Bharrat Jagdeo administration under severe pressure and the situation persisted all through the subsequent Donald Ramotar administration and the first two years of the current David Granger administration, until the factory was shut down at the end of last year for divestment/privatisation.
The Skeldon factory also had a high cost of production of sugar – around US 40 cents per pound – which is far higher than world market prices.
The ad also says the factory was “newly built,’ while noting that it was nine years old. Construction started in 2005, which may render the description inaccurate.
Other features of the Skeldon estate advertised are its water treatment, cogeneration and diesel plants, inventories, equipment and rolling stock. The ad also cites a long-term lease tenure, initially 25 years, for 11,900 hectares of cultivated lands with an option to renew.
It also cited fields in 10hectare plots, access to a well-established research facility and nursery with several cane varieties, 70% mechanisation from mechanical tillage/planting to harvest and a local pool of experienced factory management and a welleducated work force.
For the Enmore Estate, it says that privatisation covers 25 acres of freehold land, with 60,000 tonnes sugar capacity, a sugar packaging house and warehouses. It also has inventories, equipment and rolling stock. Furthermore, there is a long-term lease tenure – initially 25 years – of 6,900 hectares of arable lands with the option to renew.
With regards to the Rose Hall sugar estate, the IM highlights the 5,650 hectares of freehold land, with a 37,100 tonnes sugar capacity factory.
Although leasehold lands are listed as part of all of the estates’ assets, James made it clear that those state lands would not be sold by NICIL as the Guyana Lands and Surveys Commission (GL&SC) is responsible for their distribution, according to the law.
He said NICIL is working with the GL&SC to ensure that the law is not breached during the divestment arrangement. “There will be no conflict because we are working with them. We have to work with them because it is the rules; state land is state land. We have to identify what is state land and what is GuySuCo land and then we deal with that accordingly,” he added.