Limit On Amount Outstanding Under Guarantees Given Under The Guarantee Of Loans (Public Corporations And Companies) Act
5893 07 Aug, 2013
LIMIT ON AMOUNT OUTSTANDING UNDER GUARANTEES GIVEN UNDER THE GUARANTEE OF LOANS (PUBLIC CORPORATIONS AND COMPANIES) ACT
Dr. Singh: Thank you very much, Mr. Speaker. I rise this morning, Sir, to move the motion standing in my name under the title “Limit on Amount Outstanding under Guarantees Given under the Guarantee of Loans (Public Corporations and Companies) Act”. It is a motion that, in fact, is very familiar to this honourable House, having previously been circulated in an almost identical form and indeed having previously received the benefit of consideration.
Let me say at the very onset of my remarks that on the last occasion that this motion or its predecessor and the predecessor of today’s Hydro-Electric Power (Amendment) Bill were considered before this honourable House, I did make a call that we, in this House, must be able to identify those matters that are of such national importance that we can rise above the differences that we will inevitably have in the normal course of democracy and political competition and embrace that which is good for Guyana. On that occasion, my call notwithstanding, these two important pieces of legislation most regrettably did not receive the benefit of approval in this honourable House. We did not permit ourselves as a Government to be daunted or deterred; instead, we endeavoured to ensure that we exert every possible effort to persuade our Colleagues on that side of the House of the merits of these two pieces of legislation with the aim of securing their eventual passage. I say eventual, but eventual in a timely manner.
I wish to place on record our Government’s recognition and appreciation of the fact that at least some of us in this House saw merit in these arguments so much so that the House today, under your very abled leadership, resolved, even if unanimously but by majority decision, to recommit these matters to this House for reconsideration. Indeed, that subsequently saw the passage of the Hydro-Electric Power (Amendment) Bill now approved by this National Assembly. I wish to place on record our Government’s appreciation of all those who contributed to the achievement of this outcome, your good self, of course, included.
We remain firmly of the belief that Amaila is good for Guyana. The reality is that much like anything else in life, there will never be perfect foresight and complete certainty and we will never be in a situation where there are no questions that are left to be asked and no answers pending. We must be able, as decision makers, as legislators and as representatives of the people of Guyana, to exercise sound, mature and carefully considered judgment when confronted with a matter of such importance and act and be guided accordingly.
What are the facts before us? I dilate on this matter particularly because I asked, in fact, to forego my opportunity to speak on the previous item because I know that I was going to be speaking now. I know that the Hon. Member, Mr. Greenidge, is coming after me, and I heard Mr. Greenidge ask a number of questions. I suspect he will not repeat them in the current presentation but they will still be there. They are there for the public record. He has asked some of them before. The reality is that there will always be questions that can be asked: is this the right project? Is it in the right location? Is it scaled on the right size? Do we have the best possible transaction deal? And we will tender answers and Mr. Greenidge will ask as he has asked before that he wants to know more about the project, I think he said the Hydro-Electric Power (Amendment) Bill does not have all of the information. Well it was never intended to have all of the information. It was intended, as indeed Hon. Mr. Nagamootoo said, to address a particular matter that, in fact, is not solely Amaila; Mr. Nagamootoo said it very well. It was not solely Amaila. The Hydro-Electric Power (Amendment) Bill was intended to amend the principal Act, an extant piece of legislation, specifically as it relates to the environmental and biodiversity offset - flora and fauna, as Mr. Nagamootoo has since styled this Bill. But Mr. Greenidge made much ado of the fact that this Bill did not include everything about the Hydro-Power Project; it was never intended to do so. It was never intended to do so.
The reality is that we have - and I will not repeat all that I have said on the last occasion that we debated this Bill - engaged the Opposition for years on this project, including at the level of His Excellency the President and meetings held with the Leader of the Opposition. Vast volumes of documentation have been shared, piles upon piles of draft agreements, analyses, studies, etc. shared with the Opposition and the more that is requested, the more we supply and we hear very few questions about what is supplied, but we hear Mr. Greenidge coming back and saying ‘Well we want additional information.’ And we supply more. We do not hear ‘Well I read this documentation and I have the following questions’ but we hear a request for more and more and more.
The reality is that a decision has to be made. The world is not standing still waiting for us to come to the end of this inexorable and apparently interminable quest for self-examination, examination of this project, hand wringing and wrist wringing. The reality is that the world is not standing still. Large international partners, credible international institutions, have a decision to make and Guyana is not their only client; Guyana is not the only potential destination for their investment. Guyana and the Amaila Falls Project are really just one opportunity; one item on their agenda for consideration. The fact of the matter is that this is the project that is before us. The fact of the matter is that all of the analyses suggest that this project is good for Guyana. The fact of the matter is detailed analyses indicate that this is indeed the least cost option for Guyana. The mere fact that a large, credible, international institutional investor of the size and scale of the Blackstone group is involved in this project in the manner in which they are, the mere fact that they would mount teams to visit Guyana at the level of seniority that came to Guyana to speak to stakeholders in Guyana and to say they are interested in seeing this project happen but we, in Guyana, need to say that you are interested too should say something to us.
We beat our chests in this National Assembly, on both sides of the House, and we say we are in favour of foreign investment and we are in favour of private sector investment. Here we have a private sector investment; this is not a public sector project or Government finding $600 million or $700 million to fund this project. This is a privately funded project for the greater part. Indeed Government will also invest in the project, but as a minority equity holder. This is a private sector project in which the private investor is not an unknown or insignificant quantity but a major internationally recognised and respected institutional investor. And so o all those who beat their chests and say that they want to attract investment to Guyana, here is your opportunity. Not to say, as was said admittedly in the heckle, ‘Let them walk’, ‘Let them go’... We have an obligation to reach out to the international investment community and I am not speaking only about Blackstone or Sithe. We have a responsibility to create an environment that is as welcoming as possible to the international investment community, not flippantly to say ‘Ok, let them walk’, ‘Let them go, we do not have time to waste with them. We are not ready yet.’ The reality is that the world is not sitting or squatting on its haunches waiting for us to get ready. We need to get ready now or else we will miss the boat.
This project has been many years in the making. Every significant domestic stakeholder other than, perhaps, the APNU today has said, “We support the Amaila Falls Project.” We cannot dismiss our private sector commission; they are the legitimately and properly elected representatives of the organised private sector in Guyana. They said very clearly, most recently on the 6th August, but it is just the latest of several statements, they appealed once again to both Government and Opposition to take all the steps necessary to ensure the passage of the necessary legislation for the Amaila Hydropower Project. They called upon all the parties involved to put the nation’s development first and to resolve this impasse in the spirit of negotiation and compromise - a significant domestic stakeholders, the private sector. We live today in an era where we are reminded constantly to listen to stakeholder’s opinion and here is an important stakeholder voicing its opinion. The organised labour movement, Federation of Independent Trade Unions of Guyana (FITUG), some of the largest unions in Guyana, expressing the concern that approximately 35,000 of their members would be negatively affected were this National Assembly not to pass legislation required to see the Amaila Falls Hydropower Project become a reality.
Recognising the importance of this matter and being able to meet the need and the request of the Opposition for every opportunity to interrogate this project and to receive answers to their questions, this Government organised an event at which the principals of Sithe Global and senior management of the Blackstone group very kindly and graciously offered to be present. They made a presentation. There was indeed a presentation by Government as there was by Sithe Global. Questions were asked by any stakeholder who wanted to ask a question; answers were provided. And one would have thought that after the technical presentation which was given to the Opposition in March, 2012, at that time His Excellency the President said, “Study this documentation and if you have any questions come back to me.” He repeated this call in March, 2013. He repeated this call in June, 2013. The Leader of the Opposition himself led many of the delegations that met with Government. What more can we do to make ourselves available to answer the questions that the Opposition might have? You had the entire Blackstone group there gathered in their senior management ready to answer questions, available to answer questions and yet we come back saying ‘We want more information; we have questions.’ You have had ample opportunity and chance. I would say, really, this is about deciding whether we want this project to happen or not.
Mr. Speaker: Hon. Minister, I have to say that you have had fifteen minutes of a good preamble on the project but the motion that is before us is about guaranteeing a loan and raising the debt ceiling. I do wish to bring you back to that. It is going to two o’clock in the morning.
Dr. Singh: Thank you very much, Sir. As always, I can rely on you to keep me on the straight and narrow. The reality is that a decision has to be made whether we are in support of the project or not and I take due regard of your observation about the preamble. I would say that in voting for the Hydro-Electric Power (Amendment) Bill earlier, I think this House made a very clear and resounding statement and those who voted in its favour are to be commended.
We have an opportunity here and it is important to make clear that the Sithe and Blackstone team that was in Guyana said very clearly that they anticipate spending further millions of US dollars to achieve financial close but they expected parliamentary support that was indeed subsequently expressed as parliamentary consensus for the Amaila Falls offset and the increase in the debt ceiling specific to the amount required for this project. Indeed, in one of the slides presented to the stakeholders by Sithe Global, slide 19 to be precise, titled “Next Steps”, bullet one says very clearly that a condition for Sithe/Blackstone participation, is that Parliament supports:
1. The AHP [as it is abbreviated. I will call it the Amaila offset]; and
2. An increase debt ceiling specific to the amount needed for Amaila.
I am aware that the Alliance For Change has been in communication with Sithe Global. They supplied a number of questions that they wanted to ask and they received answers, including clarification on the amount of the ceiling on debts that can be guaranteed and I am aware that a response was supplied that indicated and confirmed that the amount required is, in fact at its limit, US $650 million equivalent to the GYD $130 billion being sought in today’s motion.
Let me say this: while we have made ourselves available to answer any questions posed by the Opposition, and indeed any other stakeholder, we have also been listening very keenly, and relative to the original motion that was debated, I believe on the 18th July, having heard some of the views expressed by the Parliamentary Opposition, we, in fact, have returned today with a somewhat modified motion. Significantly, Sir, first of all, many of us would recall that the view was expressed that the increase in the ceiling on guarantees is a blanket increase, can be used for any purpose, not necessarily for Amaila and indeed in its original formulation, one can be forgiven for thinking so, although, in fact, I hastened to add that that was certainly not the intentions of our Government. In fact, to concretise our intentions in this regard and in what I hope will be a clear and explicit demonstration of our responsiveness to the views expressed by the Opposition, the motion that I bring to this House on behalf of this Government today amends the original motion in the following manner to address that specific concern.
Whilst it increases the amount of the ceiling being sought, it includes a proviso that reads as follows:
“Provided that this amended aggregate limit shall only apply to the obligations of the Guyana Power and Light Inc to make payments to the Amaila Falls Hydro Power Inc, its lenders or their respective lawful successors pursuant to any agreement.”
In summary, in an explicit demonstration of our responsiveness to the views expressed by our Friends on that side of the House, we have removed from the table any room for fear or concern that this increase in the ceiling creates an opportunity for debts to be guaranteed, other than those associated with the Amaila Falls Hydro-Electric Project. We have removed that from the table.
The new limit, once this motion is approved, shall be applicable only in relation to GPL’s obligations in relation to Amaila Falls Hydro-Electric Project. We heard concerns about the ceiling being sought. Recognising that there was a desire to bring the ceiling to the lowest possible level, having engaged with the other parties involved in the project, the current motion reduces the amount being sought for approval from $150 billion to $130 billion, equivalent almost exactly to the $US650 million that Sithe Global has independently indicated to the Alliance For Change is the ceiling required. It is no more than the ceiling required. I believe that this represents a significant effort on the part of the Government to demonstrate that we have listened. We have heard the concerns expressed and we do not want these to be impediments to passage so we have taken them off of the table by amending the motion. I would say that with the same resolve demonstrated earlier today in ensuring recommittal and reconsideration of these matters, with the same resolve demonstrated earlier today in ensuring passage of the Hydro-Electric Power (Amendment) Bill, I trust, Sir, that this House can speak with as much of one voice as it possibly can.
I note that our Friends in APNU did not vote in favour of either of the two previous matters that I alluded to, but there is yet room for them to adjust their position on this matter. I see the Leader of the Opposition smiling as if to inspire me with optimism. Like I said, there is yet room for minds to be changed, for positions to be altered and I trust that we will secure, at the very least, a majority vote but, ideally, on this final matter, I really hope we can secure a unanimous vote. Ultimately, Amaila Falls Hydro-Electric Project is good for Guyana and the National Assembly must make bold tonight...this is the third opportunity. APNU missed the first and the second but, perhaps, they will avail themselves of the third opportunity and speak with one voice to ensure unanimous passage of this motion so that the Guyana National Assembly tonight can send a clear and equivocal signal to the rest of the world that we recognise that this project is good for Guyana and we want to do what is good for Guyana.
With those words, I commend this motion to this honourable House. I have spoken with my customary brevity as you, no doubt, would have recognised. I have endeavoured to be faithful to the cause of brevity and I trust that my Colleagues on that side of the House will respond with an affirmative vote.
I thank you very much, Sir, and I will move the motion formally at the appropriate opportunity. [Applause]
Dr. Singh (replying): Thank you very much Sir. Let me say first of all, just to be clear, that the insertion of the restriction of the applicability of this amended ceiling, is an insertion that is being purposed by the Government and so the only change that is being purposed by Mr. Ramjattan is really the insertion of the words, “reviewable after three months”. Apart from of course the quantitative limit being prescribed. Let us be clear that it would be misleading to create the impression that it is Mr. Ramjattan’s amendment that introduces this restriction to the Amaila Falls Hydro-Electric Power Project only.
Mr. Speaker: Hon. Minister you did say, when you first spoke, that you listened to the Opposition and have responded.
Dr. Singh: That is correct; I did Sir.
Mr. Speaker: Insofar as that amendment is concerned.
Dr. Singh: I did and I do not believe that anything that I just said deviates from that, except to say that it is a misrepresentation to suggest that this insertion is as a result of an amendment moved by Mr. Ramjattan.
Let me say first of all that we had, I believe, particularly on the part of the Hon. Member Mr. Greenidge, a good display of the nature of the dilemma that we face. Mr. Greenidge read from the Guarantee of Loans Public Corporations and Companies Act, the principle Act under which this motion is now being moved. He read in particular from section 4(2), which reads as follows and I will read too, again. Section 4(2) requires the Minister,
“as soon as may be after the expiration of each quarter of each year, during which guarantees and undertaking may be given under section three, lay before the National Assembly a statement of the guarantees or undertakings given under that section during that quarter.”
Mr. Greenidge asks whether this section has been complied with. Well of course it has because no new guarantees have been issued for several years. The question of tabling in the National Assembly, at the end of a quarter a new guarantee did not arise. The requirement of this section is clear English language and was met in its fullness.
The section goes on to say the particulars that,
“... as long as such guarantees are enforced, details shall be laid before the National Assembly as soon as maybe after the end of each financial year, an up to date account of the total amount of such guarantees, etc.”
In this regard, I turn the attention of this Honourable House to page 2/56 of the Report of the Auditor General for the Fiscal Year ended 31st December, 2011, to a statement prepared by Government, entitled, “Schedule of Government guarantee as at 31st December, 2011, a statement prepared by Government and submitted to Parliament. I understand why Mr. Greenidge has some difficulties familiarising himself to these statements. I believe that the matter that audited financial statements have not been submitted to this National Assembly in relations to the years of his tenure is now a matter of public notoriety.
I turn this House’s attention to page 495 of the ... [Interruption] [Mr. Greenidge: That is old news.] Well I glad that you accept that it is old news. Finally it appears that we have now accepted that it is irrefutable. [Interruption] [An Hon. Member: Stale news.] It may be stale or it may be old, it is a fact though. It is a fact that Mr. Greenidge is attempting to refute unsuccessfully.
Turning to the 2013 Estimates, page 495, there is there a statement of outstanding loans and credits contracted by public corporations and guaranteed by the Government of Guyana. All these abundant details are provided there. The point I wish to make, I am not going to dive into these statements or anything like that – the point I wish to make is that this is really illustrative of the nature of the problem. Had Mr. Greenidge taken the time to read what is before him, he would have discovered in fact that this information has been before this National Assembly for the longest while. But it suits his purpose to run around this Assembly and to run around this country saying, “I am asking for information and I need more information”. It suits his purpose. Conveniently not to read what information is before him; and conveniently to ignore information that is provided to this House and placed in the public domain – it suits his purpose.
The fact of the matter is we need to be careful not to pursue narrow political agendas, when important national interest issues such as this confronts us. The Amaila Falls Hydro-Electric Power Project is good for this country. One cannot help but wonder whether the attempts to frustrate the legislation that is required as a prerequisite to this project are designed really to frustrate the realising of these projects because these projects were they to be realised under this Administration, would somehow redound to the political advantage of this administration. But that is called cutting your nose off to spite your fact. That is called opposing an initiative that will benefit the people of Guyana because one wants to hurt the political chances of the People’s Progressive Party. Surely one cannot claim to be a responsibility political leader and take such a position as this.
I wish to say that at some point in time the APNU needs to ask itself whether it will continue to be led by Mr. Greenidge’s representations on matters such as this, clearly countered to the national interest and countered to any political movement that wants to position itself as being interested in the well being of the Guyanese people. This is a question that the APNU at some point in time will have to confront.
Turning to Mr. Ramjattan’s presentation, let me say that I welcome the unequivocal statement of what I thought was an unequivocal statement of support for the Amaila Falls Hydro-Electric Power Project. I think that is a good thing. [Mr. Nagamootoo: Conditional...] Conditional or what words you want to use, I do not know. Let me say conditional support, as Mr. Nagamootoo prefers. [Ms. Kissoon: Time Hon. Member.] Had your Colleagues, my dear, saw it fit to elect you Speaker, I am sure they would have. They must have known something.
Turning to the duly elected Speaker. [Interruption] It is okay for everyone else to throw remarks, but we are not entitled to throw remarks here. Mr. Nagamootoo, it is okay for everyone else to throw insults, except those of us on this side of the House, and you pretend to be a champion of fairness; you pretend to be a paragon of virtue and a champion of fairness. But anyway, let me say that I welcome Mr. Nagamootoo’s expressions of conditional, if that is how he prefers to describe it, support for the Amaila Falls Hydro-Electric Power Incorporation.
But let me say, very simply, that on the matter of the guarantee, Mr. Nagamootoo confess that he is not an expert on this matter and I think that confession is, you know... Mr. Ramjattan, my apologies. He said, “I am not an expert on this matter ... [Interruption] On the contrary I do not pretend to be an authority on anything either, Mr. Nagamootoo unlike your good self.
Mr. Ramjattan, unlike Mr. Nagamootoo who is incapable of admitting any deficiency on his own part; Mr. Ramjatttan to his credit confessed that he is not an expert on this matter and he went on to say that my concern is that the amount is too high. Well the analogy is really very simple. Many of us have guaranteed loans for persons who go to the University of Guyana. They borrow $127,000 a year to pay their student fees; they attend the University of Guyana; they graduate, many of them I hope repay their student loans.
When one signs as a guarantor, they do not go up to the provider of the loan and say, “I know that this student will repay $100,000 and the shortfall will be $27,000, so I will only guarantee $27,000.” I rather suspect that you would be shown the door. In much the same manner that some of us have guaranteed loans at banks or provided collaterals as security at banks. One borrows $1 million at the bank and is asked for collateral equivalent to $1 billion.
I do not suspect that many of us will be able to get away with saying to the banks, I know that out of this $1 million, $800,000 will be paid back and the shortfall will only be $200,000, so accept only $200,000 worth of collaterals or accept a guarantee equal only to $200,000 worth.” I rather suspect that we would be shown, like the person showing up at the student loan agency, the door in short thrift.
The fact of the matter is and one does not have to be an authority on this subject for this to be evident, the fact of the matter is the guarantee that is required is for the theoretical sealing of the exposure, not for the computed or the estimated default, but the theoretical sealing.
The Alliance For Change approached an authority on this matter, the sophisticated large institutional investor investing in this project, who they have been doing deals worth hundreds of millions United States of America dollars all over the world, and who responded in writing and explained why the theoretical ceiling of the exposure is US$650 million, informing the need for a guarantee of US$130 million.
This is not rocket science; this is not neurosurgery; this is really quite a simple matter. Government, as the sole shareholder of GPL is being asked to stand behind GPL and simply say, in the event and to the extent - to any extent - that GPL might default, Government, a sole shareholder of GPL, will step into GPL’s shoes and meet GPL’s obligations.
The fact of the matter is that that guarantee might never be activated and GPL might never default. Given the numbers and the volume of power that they will be selling and the price at which they expect to be selling it and their avoided cost of imported fuel that they will enjoy, the reality is that that shortfall may never materialise. But the lenders require, at the current point in time, an assurance. I think Mr. Ramjattan to his credit recognises the need for this assurance. The lenders require an assurance that the sole shareholder of GPL will stand behind GPL in the event of a default.
Ultimately, the Alliance For Change has presented an amendment. Like I said their amendment is quite simple. It does two things, to be clear: it inserts the words, “reviewable...” I do not have the... I am sure that I have it here, but I do not have it immediately in front of me – reviewable, I think, after three months at the end of the proviso that is being inserted by Government. It amends the numerical or quantitative ceiling we proposed in our current formulation of a ceiling of $130 billion. The Alliance For Change proposed the ceiling of $50 billion, I believe it is.
Ultimately, the question is what will be the response of our partners to this project or our partners in this project to this development? The reality is that the guarantee that is required is in the vicinity of $130 billion. The question before us is; given that that is the guarantee that is required and given that there were public pronouncements that these two legislative amendments are required to be enacted for at least one or two partners to remain engaged in the project, what will their response be?
The question before us in this House is really a simple one. Well perhaps not such a simple one. Some might choose to interpret the 50 as being equal to zero; some might say that we either have a guarantee for the amount required, like the person turning up at the student loan agency with the guarantee for $127,000 or you do not have a guarantee at all. Some might say that the choice is between $130 billion and zero.
Therefore, the issue is, is $50 billion better than zero? This is the question which confronts us and frankly speaking, it is anyone’s guess what the answer to that question is. Is $50 billion better than zero? Some might say $50 billion in the current instances is equal to zero because with only $50 billion one do not have a guarantee that meets with the satisfaction of the lenders. Others will say $50 billion is better than zero because it represents a half or a third of the way; a partial step, even if not the full step.
This is the question which is before us and I trust that this House will determine this question when it exercises the vote.
I wish to conclude on that note. Again to say that I believe progress has been made today. We did secure one critical amendment and it remains to be seen now whether we will secure another critical amendment, that is to say, an amendment to the ceiling imposed on the aggregate amount of guarantees that can be extended by Government in respect of borrowings and financial obligations owed by public corporations and Government owned companies.
With those words, I commend the motion brought before this House and the associated amendments in my name.
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