Off and flying

Stabroek News
July 20, 1999

At last, after being unpredictably delayed, GA-2000 is off and flying. It is a proud moment for local private enterprise. Among the owners and directors are several of our brightest and most energetic young businessmen. They have a chance to show their stripes and whatever teething and other problems they may face there will be widespread confidence that they have the ability and intelligence to overcome them. As it was, the unexpected delay in starting up, due to circumstances beyond their control, caused them to lose the benefit of some of the current peak season.

The first thing they will seek to do is to consolidate the scheduled flights to New York and Toronto. If they establish the record of punctuality and good service we all expect this will not take long. They face competition but that was expected and will keep them on their toes. Regular flyers ought to benefit from the improved standards that will result from increased competition.

These have been difficult years for business. The falling gold prices have not made life easy for our miners. Indeed one wonders at what stage this falling market will impact on Omai Gold Mines who have been protected to some extent by forward selling. But that cannot last forever and the market continues to be under threat from bulk sales by central banks and others. Already, major mines in South Africa are under threat. The consequences of a closure by Omai or even a serious cutback in production if prices continue to fall would be most unpleasant for those employed and for the many businesses that deal with Omai. Though this is not at present on the cards it is worth remembering that these investments are never without risk due to market and other conditions.

Investors do not come falling like manna from heaven. When former President Desmond Hoyte started privatising and encouraging investment after the economic recovery programme was instituted there were many who criticised the deals obtained, of which Omai was one. Our position was that given the political background where Guyana had nationalised several major businesses and had had no record of encouraging or attracting private investment for over two decades one could not operate from a position of strength. Accordingly, though the deals concluded should be seen to be transparent (it is not feasible to reveal all the details while one is negotiating) and while it is desirable that the negotiators should be knowledgeable and have some experience we accepted that it may have been necessary to make some concessions to attract investment, at least initially.

For this reason we also support the current GEC privatisation. The companies involved are reputable and experienced and there is every reason to believe that this will lead to Guyana having a reliable electricity supply, which can be the basis for further development. The economic loss over the years from an irregular supply has been incalcuable. The corporation also has massive accumulated losses, indeed audited accounts have not been produced for many years. These losses are borne by the government and ultimately the taxpayers so there are hidden costs in addition to the rates we pay. A lot of rehabilitation and further capital investment is needed. In these circumstances, any investor will want a fairly high level of return and protection against what may be seen as a regulatory body with an erratic record. That is the reality of the situation. There may be room for debate on the revised wording of the legislation but if the new owners manage the utility efficiently, as there is every reason to believe they will, then it is also reasonable to expect that this will be reflected, sooner rather than later, in reasonable and economic rates for consumers. After all, the high rates we now have are due to decades of bad management and inefficiency in many areas, including in the transmission and distribution system and the billing and accounting systems.

There are few perfect deals out there. The stronger the economy the easier it is to attract new investment on favourable terms. Building a sound base after years of stagnation is much harder. Judgments have to be made taking all the available circumstances into account.

The GA-2000 privatisation was perhaps one of the best deals one can hope for. It involved our own investors and entrepreneurs and if they do as well as we all hope it will create a lot more confidence for the future. In the meantime the new managers are faced with a lot of hard work to get it running smoothly and to build a satisfied clientele.

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Guyana: Land of Six Peoples