- Ramroop says Lall needs ‘professional help’
In what has to be the most vicious attack on private enterprise in Guyana in general and on the Ramroop group of companies (Queens Atlantic Investment Inc -QAII) in general, the Kaieteur News today (Sunday) published a litany of lies and libellous accusations under a front page banner headline ‘Govt spent US$5M to rehab Sanata, then sold it to Ramroop for US$3.4M – Audit report reveals’.
In the body of the story however, the Kaieteur newspaper could NOT point to any statement in the audit report of NICIL by Anand Goolsarran which even implied that the Government had paid any sum much less ‘US$5M to rehab Sanata’. The report could not so state for the simple fact that it is a matter of public record that the cleanup of the Sanata Textile complex, inclusive of asbestos was done during the lease and after the purchase when QAII took possession of the complex and was totally funded by QAII.
All the audit said about the Sanata purchase, and which Kaieteur ironically published was, “By Order No. 40/2010 dated November 29, 2010, NICIL sold 18.891 acres of land and buildings and erections at the Plantation Ruimveldt (Sanata Textiles) to Queens Atlantic Investments Inc. (QAII) for $689 million (US$3.4M). The note on NICIL’s publication reads: After being advertised for sale but no proposals was received, in mid- 2007, a proposal was received from QAII for the development of the compound with a US$27 million investment plan.
The proposal was for a lease with an option to purchase. At the time of the proposal NICIL was facing continued vandalism and destruction to the property despite the presence of security. In 2007, following the requisite approvals, a lease was issued and in 2010 having satisfied all the conditions precedent to exercise the option to purchase, the property was sold at the current market valuation of the property before the improvements were implemented”
Asked for a comment, Dr Ranjisinghi ‘Bobby’ Ramroop pointed out that there is nothing in this statement that Kaieteur News could possibly point to, to make its libellous claim that Government had spent any sum to clean up Sanata Complex.
Dr Ramroop said, “I want to state categorically that after the lease, the Government of Guyana did not spend a single cent on the cleanup or any other expense that went into rehabilitating what was at that time buildings reverting back to a jungle. Glenn Lall, has been peddling this misinformation and lie since 2008, when we launched the Guyana Times. At this time I think he is struggling for relevance and should get some professional help.”
BACKGROUND ON SANATA TEXTILES
Sanata Textiles Limited was dissolved under the Public Corporations Act pursuant to the Sanata Textiles Limited (Dissolution and Transfer of Assets and Liabilities) Order No 49 of 2000. All assets were then transferred to the National Industrial and Commercial Investments Limited (NICIL) from December 29, 2000. The property was leased to G&C Sanata Company Inc. That company was forced to downscale and later cease complete operations. The complex was left abandoned for several years.
The handover of all G&C Sanata Company Inc’s assets to NICIL resulted in government assuming full responsibility and control of the complex. Several challenges were encountered namely:
Security ― Despite a change of three different security firms, the complex located at Industrial Site, Ruimveldt was still subject to numerous break-ins and theft. Millions of dollars in losses were suffered as a result of those crimes. Equipment, furniture and cables were among the items stolen. The electrical cables attracted the thieves, given their high retail value in the scrap metal trade. There were also a number of cases of gunfire in the compound as thieves engaged with security.
Vandalism ― due to the ongoing theft, the equipment and installations were vandalised beyond repair and had little or no value at the time of privatisation. The electrical circuitry was severely damaged from the theft of cables and panels resulting in the compound being in a state of darkness.
High maintenance costs ― Added to the losses incurred as a result of theft and vandalism, maintenance of the complex proved costly, burdening NICIL. Some $20 million had to be budgeted annually towards payment of insurance, rates and taxes, repairs and maintenance, water, electricity, security, salaries and other miscellaneous expenses.
In light of these challenges, a decision was made to have Sanata Textiles complex privatised. This process began in the last quarter of 2006 with advertisements for the former G&C Sanata operations.
According to the Ramroop Group of Companies, “this was done no less than 20 times and no bids were received”. The original closing date of January 19, 2007 was extended to February 28, 2007 to encourage interest from both local and overseas investors but yet no bids were received.
Investors were then invited to submit tenders for the leasing of assets (plant and machinery of the printing and dyeing factory) and the leasing of land and buildings or factory associated with the printing and dyeing factory.
This is as a result of the rules of competitive bidding of the Privatisation Policy Framework Paper of June 1993 where it was stated that where an entity has been advertised and there are failed bids, direct negotiations can be ensued with interested parties. Relying on this policy and past precedent set by the privatisation of Linmine to Omai in 2003 following the non-receipt of bids to privatise, NICIL began negotiations with QAII for the lease of the complex.
The entire compound was overrun with bushes in which thieves were known to hide
The entire compound was overrun with bushes in which thieves were known to hide
In April 2007, QAII submitted a business plan to lease the complex. The business proposal was unanimously recommended for approval following detailed discussions and negotiations with the Privatisation Board on May 9, 2007. Cabinet subsequently endorsed the recommendation.
Key terms of the proposal included:-
• the lease rate being set in US$ and being payable in the equivalent Guyana dollars at the date of payment;
• the lease rate being indexed to the rate of inflation in the U.S. after 2009; and
• all rates and taxes being to the account of the lessee.
Benefits of QAII proposal
The Privatisation Board and Cabinet considered the following benefits in accepting the proposal:-
Utilisation of the land and buildings which had fallen into a state of dilapidation and vandalism;
Avoidance by NICIL of the high level of maintenance, security, rates and taxes, and insurance associated with the property;
Creation of new jobs;
Conversion of the property which was not making a net return into an entity with positive cash flow;
Encouragement economic activity in the Ruimveldt Industrial Area.
On June 4, 2007, a lease agreement between NICIL and QAII was entered into for a 99-year lease with an option to purchase after the completion of three years. The rental paid by QAII was 50 times greater than the average rent paid to the government by other companies in comparative industrialised areas. Other companies have typically paid as little as G$1 per square foot, a fraction of what was being paid by QAII.
The table below provides a comparison of the leasing arrangements for other operations that have been approved by the Privatisation Board/government.
The Ramroop Group of Companies pointed out that the transformation today of the Sanata Textiles Complex is testimony to Queens Atlantic Investment Inc’s determined drive and dedication to invest and contribute to the country’s overall growth and development.
As the pictures (seen below in this post) conclusively show, the removal of the asbestos from the facility and other major rehabilitation were done after the QAII acquisition. These costs amounted to over US$3M and were instrumental in doubling the value of the complex by the end of the decade.
Despite the significant challenges, QAII declared that, as an investor, it is proud to take a leading role in the economic development of Guyana and remains committed to servicing and improving the social well-being of citizens.
“This is notwithstanding the continuing unwarranted and malicious attacks by the Kaieteur News and its owner ‘Mohan’ Glenn Lall, that are aimed to besmirch the company’s reputation and good image.
The compound now houses newly-constructed buildings and infrastructure inclusive of access roads, fencing, lighting, security, and a waste disposal system to name a few. Additionally, significant investments have been made in the acquisition of state-of-the art machinery and equipment for the printing and hardware manufacturing divisions.
Photos below show the entrance to the textile production facility of the Sanata complex at the time of privatization; vandalised electrical panels, an old maintenance building, an old access road; the state of the internal textile production areas; the old Sanata Textile Mills canteen. The Ramroop Group of Companies also pointed out that, at the time of acquisition, the entire Sanata Complex was in a state of disrepair.
“Fences had fallen apart; drains were blocked; roads were inaccessible; vegetation was overgrown; garbage was prevalent; equipment and installations were vandalised beyond repair; the buildings were infested with termites and unfit for occupation; and there was also flooding in some sections despite it being the dry season,” the group recalled.