THE FIVE BILLION DOLLAR QUESTION
The government’s shares in the Guyana Telephone and Telegraph Company (GT&T) had to be eventually placed on the auction block. These shares could not have been held indefinitely by the State, because the government needed the proceeds from these shares for its information and communication technology (ICT) programme.
The Norway funds have been dribbling in. Those environmental funds are needed to build the hydroelectric plant at Amaila Falls and to be used as state equity in the hotel which the oligarchy is interested in building in Guyana so that it can have an outlet for its billions.
The Norway funds are not going to come fast enough to allow for the ICT investment that is needed. The sale of the government’s 20% shares in GT&T was always, therefore, going to have to be used to fund the national ICT strategy.
The government has repeatedly said this was the reason for selling the shares. But there may have been another more important reason for advertising the shares for sale. The oligarchy is interested in want outlets to invest their money. The shares are a lucrative proposition. It was not always so though. In the early days, the shares were underperforming financially because the returns on them were poor.
But in recent years, the dividend flow became quite impressive. Once something is making money, the oligarchy is going to be interested. With their inside track, the oligarchy calculated that these shares were a good source to pump their money into because it offered at least a 10% return. That may not be as good as the hotel deal or the deal that some private investors made in the Berbice River Bridge, but a 10% return is far more than the banks are going to pay to keep your money. The oligarchy therefore must have seen these shares as a business opportunity.
The government thus suddenly decided that these profitable shares had to be sold. The opposition asked that it be sold to the workers, but this was always going to be difficult, because the workers were never ever going to be able to secure the capital to purchase those shares in whatever manner it was to be sold. The shares were always going to be out of reach. The shares were eventually advertised for sale. No base price was set. The bids came in. The government said the prices were too low. It could have continued to seek bidders, including breaking up the shares into portions that the local private sector could afford. But there was always the suspicion that the government had its reasons why it wanted its shares to be sold en bloc.
As things stand now, it is reported that a Chinese firm has made an offer. It is very interesting that the Chinese firm made the offer now and not during the original bid. The question is why were other offers not invited, that is, why were the shares not placed once again on the open market? This reminds us very much of the sale of Sanata Textiles Mills Complex. The government advertised for the sale or lease of one part of the complex, but eventually accepted a later offer for the lease of the complex, with an option to buy, from an investor. In the case of the shares of the GT&T, the shares were advertised and there was no acceptable bidder. Then the shares are now sold to a Chinese company.
This is not too far off from what also happened with the one laptop per family project. The contract for the supply of laptops was advertised. Three firms bid and then we were told that none was successful.
Interestingly, the specifications were changed, and new bids invited. Obviously the new bidders would have by then learnt of what the old bidders had bid. These old bidders were thus placed in a disadvantageous position. And, of course, we know a Chinese firm which has links to someone who is close to the local oligarchy won the bid.
Now we come to the five billion dollar question. Why would a Chinese firm be interested in holding 20% shares in a telecommunication company which is about to face the loss of its monopoly on overseas calls and impending legislation for the liberalization of the telecommunication sector?
Why would someone be investing $25M in shares which would not allow them to have determining say in the affairs of the company they are investing in? The Chinese are not interested in going into the telecommunication market in Guyana. We are too small for that interest. So why invest all this money, and who is behind this investment?
The answer is right in front of your noses!
...but I think this Peeper is on to something here. The Peeper has the general drift of how this government operates.
.