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THE National Industrial and Commercial Investments Limited (NICIL), whose executing arm is the Privatisation Unit, is an important institution, responsible for the sale and disposal of State assets, as well as investments on behalf of the State. It was a creature of the former PNC regime, created to perform the very functions alluded to, a fact conveniently forgotten by the many critics and naysayers of the PPP/C Government. But within the Tenth Parliament, this institution has become the target of well orchestrated, premeditated, and consistent attacks by Parliamentary opposition parties, APNU and the AFC, alleging all manner of corruption as to its mode of institutional function.
After months of opposition-led accusations that assumed frenzied proportions, a comprehensive report was released by the government, at a recent press conference by President Donald Ramotar, during which he answered questions as to NICIL/PU’s operational principles and its institutional processes.
Entitled Guyana’s Privatisation Programme: The Institutional Framework and Results For Phase II (1993-2008), this report is conveniently compartmentalised for systematic reading, and gives a holistic analysis of the processes undertaken with regard to State assets, onto 2008.
Phase 1
Beginning with the period up to 2002, categorised as Phase 1, there were 14 partial divestments and the strategy employed to close down unprofitable entities, divesting them in the process.
Before outlining Phase 2, some description is necessary as to the institutional framework that supports NICIL/PU’s function of disposal of state-owned assets.
Rigorous scrutiny
Privatisation, despite the accusations and other spurious assertions, is guided by a rigorous process, during which every step is scrutinised, leaving nothing to chance. Importantly, it must be reiterated that because of concerns as to the programme’s methodology, particularly its transparency, it was temporarily suspended by the PPP/C Administration in 1992. It was re-introduced when the latter unveiled its Privatisation Policy Framework Paper of June 1993.
This facilitated the critical function of scrutiny for each transaction, to be undertaken in a thoroughly transparent manner by both the Privatisation Unit and the Cabinet.
The process initiated by the PPP/C Government began with identifying the specific entity for disposal. This is followed by a review of the legal, financial, strategic and environmental issues. Major stakeholders such as the Board of Directors, Unions, and employees are included.
The valuation of the business and its assets comes next, after which a profile identifying issues to be resolved before eventual privatisation is made. The Privatisation Board then considers details, before deciding on a recommendation to Cabinet.
Once there is Cabinet approval on the privatisation type, the Privatisation Unit is informed via writing, and implements privatisation. In the event of a non-decision by Cabinet, the submission returns to the Privatisation Board.
With approval received from Cabinet, the Privatisation Unit then publicly advertises the sale of the entity. This phase includes packages being given to interested parties; a request for proposals setting out for example, what information is to be submitted; an Information Memorandum that describes the entity’s legal financial and operating status; and drafts of legal agreements issued to prospective parties.
The marketing process is then engaged, inclusive of advertising in the local and overseas press, according to the scale of the entity. Also a workshop for promoting interest and encouraging the submission of proposals is held.
Entering the due diligence phase, this occurs when prospective investors have registered their interest, entering into a confidentiality arrangement with the Privatisation Unit. It is usual for additional site visits, clarification workshops, and written clarification of issues to be done at this time.
Moving on to the bid closure process, this evidences the closure and recording of bids in the presence of the registered investors and a representative of the Auditor General’s Office. With its completion, the Privatisation Unit then submits the bid in report form with all information for a decision to be made.
At the Privatisation Board stage, the Privatisation Unit’s submission with minor modifications, along with the recommendation of the Privatisation Board to Cabinet, is made. Here it is considered, with the decision made in writing to the Privatisation Board Chairman and a copy given to the Privatisation Unit for implementation.
On receipt of the decision, the successful bidder is notified, and he/she is then requested to make a deposit and deposit agreement within a defined time-frame. At the negotiations stage, the parties would then seek to resolve any legal issues and any other conditions that may have changed, before preparing for the final handover. Meetings are usually held between the unions, the preferred investor and the Privatisation Unit.
Once all the approvals are given and documents prepared for execution, a date is set for its final execution, with the price fully paid.
Phase 11
According to the report, during the Phase 11 period, commencing as from 2003, there were 99 transactions from 29 entities, further subdivided into 26 privatisation transactions; 46 real estate transactions, and 27 restructuring/wind-up transactions.
Of the 26 privatisation transactions, four were not advertised. Of this number, two were bought by employees; one an inter-Government sale and the other on “special time-bound circumstances”.
For the 46 real estate transactions, 36 were for property sale, and 10 leased. The 36 sale transactions resulted in eight not being advertised; six sold to the occupant; one to facilitate development; and the other disposed for a large institution.
Touching on the eight that were not advertised, the report reveals that all their transactions were approved by the Privatisation Board and Cabinet.
Finally, transactions grossed from Phase 1 were approximately G$1.1B and US$25M; while proceeds from Phase 11 netted G$23B over the period 1994-2008.
Despite the release of NICIL’s transactions over the period mentioned, and a step by step explanation of the process by which each transaction is carried out, there are still accusations.
There is the subtle hint that the tables presented in the report are beyond the comprehension of the ordinary Guyanese; but what he/she can surely appreciate is the detailed step by step procedure via which each of the transactions would have been executed, inclusive of scrutiny by the Privatisation Board and Cabinet, that gives the final nod . (GINA)
After months of opposition-led accusations that assumed frenzied proportions, a comprehensive report was released by the government, at a recent press conference by President Donald Ramotar, during which he answered questions as to NICIL/PU’s operational principles and its institutional processes.
Entitled Guyana’s Privatisation Programme: The Institutional Framework and Results For Phase II (1993-2008), this report is conveniently compartmentalised for systematic reading, and gives a holistic analysis of the processes undertaken with regard to State assets, onto 2008.
Phase 1
Beginning with the period up to 2002, categorised as Phase 1, there were 14 partial divestments and the strategy employed to close down unprofitable entities, divesting them in the process.
Before outlining Phase 2, some description is necessary as to the institutional framework that supports NICIL/PU’s function of disposal of state-owned assets.
Rigorous scrutiny
Privatisation, despite the accusations and other spurious assertions, is guided by a rigorous process, during which every step is scrutinised, leaving nothing to chance. Importantly, it must be reiterated that because of concerns as to the programme’s methodology, particularly its transparency, it was temporarily suspended by the PPP/C Administration in 1992. It was re-introduced when the latter unveiled its Privatisation Policy Framework Paper of June 1993.
This facilitated the critical function of scrutiny for each transaction, to be undertaken in a thoroughly transparent manner by both the Privatisation Unit and the Cabinet.
The process initiated by the PPP/C Government began with identifying the specific entity for disposal. This is followed by a review of the legal, financial, strategic and environmental issues. Major stakeholders such as the Board of Directors, Unions, and employees are included.
The valuation of the business and its assets comes next, after which a profile identifying issues to be resolved before eventual privatisation is made. The Privatisation Board then considers details, before deciding on a recommendation to Cabinet.
Once there is Cabinet approval on the privatisation type, the Privatisation Unit is informed via writing, and implements privatisation. In the event of a non-decision by Cabinet, the submission returns to the Privatisation Board.
With approval received from Cabinet, the Privatisation Unit then publicly advertises the sale of the entity. This phase includes packages being given to interested parties; a request for proposals setting out for example, what information is to be submitted; an Information Memorandum that describes the entity’s legal financial and operating status; and drafts of legal agreements issued to prospective parties.
The marketing process is then engaged, inclusive of advertising in the local and overseas press, according to the scale of the entity. Also a workshop for promoting interest and encouraging the submission of proposals is held.
Entering the due diligence phase, this occurs when prospective investors have registered their interest, entering into a confidentiality arrangement with the Privatisation Unit. It is usual for additional site visits, clarification workshops, and written clarification of issues to be done at this time.
Moving on to the bid closure process, this evidences the closure and recording of bids in the presence of the registered investors and a representative of the Auditor General’s Office. With its completion, the Privatisation Unit then submits the bid in report form with all information for a decision to be made.
At the Privatisation Board stage, the Privatisation Unit’s submission with minor modifications, along with the recommendation of the Privatisation Board to Cabinet, is made. Here it is considered, with the decision made in writing to the Privatisation Board Chairman and a copy given to the Privatisation Unit for implementation.
On receipt of the decision, the successful bidder is notified, and he/she is then requested to make a deposit and deposit agreement within a defined time-frame. At the negotiations stage, the parties would then seek to resolve any legal issues and any other conditions that may have changed, before preparing for the final handover. Meetings are usually held between the unions, the preferred investor and the Privatisation Unit.
Once all the approvals are given and documents prepared for execution, a date is set for its final execution, with the price fully paid.
Phase 11
According to the report, during the Phase 11 period, commencing as from 2003, there were 99 transactions from 29 entities, further subdivided into 26 privatisation transactions; 46 real estate transactions, and 27 restructuring/wind-up transactions.
Of the 26 privatisation transactions, four were not advertised. Of this number, two were bought by employees; one an inter-Government sale and the other on “special time-bound circumstances”.
For the 46 real estate transactions, 36 were for property sale, and 10 leased. The 36 sale transactions resulted in eight not being advertised; six sold to the occupant; one to facilitate development; and the other disposed for a large institution.
Touching on the eight that were not advertised, the report reveals that all their transactions were approved by the Privatisation Board and Cabinet.
Finally, transactions grossed from Phase 1 were approximately G$1.1B and US$25M; while proceeds from Phase 11 netted G$23B over the period 1994-2008.
Despite the release of NICIL’s transactions over the period mentioned, and a step by step explanation of the process by which each transaction is carried out, there are still accusations.
There is the subtle hint that the tables presented in the report are beyond the comprehension of the ordinary Guyanese; but what he/she can surely appreciate is the detailed step by step procedure via which each of the transactions would have been executed, inclusive of scrutiny by the Privatisation Board and Cabinet, that gives the final nod . (GINA)
