Public Monies on Marriot Hotel Be Halted Until Approval by the National Assembly2006 17 Dec, 2012
Mr. Greenidge: I rise to support the motion before us, the essentials of which seem, to me, to be very clear and have been very much absent from the presentations emanating from the last speaker on the other side. I would like to draw the attention of our colleagues to the two resolutions, the clauses, at the end of the motion, which specifically called on the Government to do certain things. It is in that context that this motion needs to be understood. The context is that there are resources, significant resources, at the disposal of a major financial agency of the State. Those resources are managed under a cloak, or behind a cloak, of secrecy and that secrecy often masks a number of irregularities. It is being said that the resources should be used in the way which maximises the opportunity for economic growth in this country.
In the context of economic growth, it is no use telling us that moneys have been put into one entity. All the investment of a government has to confirm or be subjected to the same litmus test. The returns across a spectrum of possible investments are looked and the resources are directed to the investment that yields the highest return. Nothing that has been said, for example, by the last speaker, suggested to us that the returns, which are expected from Marriott Hotel project, if we might call it that, would yield the maximum relative to all the other opportunities, all the other options, for the use of resources. That is why it is being argued that the resources and their disposal should come to one central point; they should be discussed within this National Assembly, recognising the principle that it is the representatives of the people who must take that decision and then one can decide on transparent and clear manner where the best returns to the resources lie. The contention, therefore, is that until the Government respects that principle, this House should not sanction the use of resources generated at the level of NICIL for any investments, any additional investments, in the Marriott Hotel.
I will turn in a minute to the question of the viability, the feasibility, the returns to the Marriott, but before I go there let me once more…I remind you, Mr. Speaker, that it seems that our colleagues have forgotten that the discussion on NICIL was the subject of a long exchange that we had earlier this year and yet we have them coming back here making all sorts of false and inaccurate allegations as to NICIL, how it worked before relative to how it works now.
Let me remind my colleagues that NICIL was established as an entity… [Mr. Neendkumar: It was by you.] Yes. It was by me… to hold and manage financial resources. The privatisation proceeds were that which were managed by NICIL. NICIL never disposed of any of those resources and what is more, Mr. Speaker, NICIL, itself, was not responsible for privatisation. That is, it was not responsible for taking State’s assets and giving it to the friends of Members of the Government, which is what it does today. It is also the case that NICIL never had under its control commercial enterprises such as the oil company and the others. Those were separate companies managed under the Public Corporation Act. [Mr. Neendkumar: What have happened to the bicycle factory, the glass factory and Sanata Textile?] The glass factory and the bicycle factories were never part of NICIL. Rest yourself - they were never. You keep insisting on bringing to this House untruth. If you want to have a debate that is going to be meaning full… [Mr. Neendkumar: …[inaudible]] Is it you who are making all of that noise? [Mr. Neendkumar: Yes.] It is no wonder the nonsense is emanating from that corner.
Mr. Speaker, we have been subject here to a whole variety of sleight of hand in relation to NICIL. I am saying to you, that the resources managed by NICIL are managed in a manner that is not transparent. It is only after the motion earlier this year threatened and, in fact, required of the Government to bring to the National Assembly the reports of companies, such as NICIL, which have resources which are supposed to go into the Consolidated Fund. It is only then that the Government made the effort to accelerate the annual reports. We suddenly find annual reports today here, when earlier on, at the beginning of the year, there were annual reports as far back as the years 2004 and 2005 only. There is a great urgency to have the annual reports, because the Government does not want to hand the resources over for general scrutiny, but the motion was passed, the resolution is very clear. All the entities which fail to confirm with the law, as of the first quarter of this year, would have to hand over the resources to the Consolidated Fund. That was the decision of this House; that is the decision which we will be going to enforce.
As regards to the question of NICIL, it is a different entity. There is an entity today which the Government has established; it has merged the operations of that entity with a whole set of other things that existed before; it is not the same entity; it is managed differently and by different persons for different purposes. It is to hide the manner in which the Government manages its financial resources and that is the reason why the Government is so reluctant to have the entity hands over resources when it collects then.
Let me turn now to the major entity, which is mentioned in the motion, and that is the Marriott Hotel. Let me say, first of all, that what we have heard so far… (Let me, perhaps by the way of a transition, say to you that my Latin is bad but I remember that there is a word “nihil” which in Latin means nothing.) From the discussion coming on the other side, in connection with NICIL, we get very much that impression that what we have been told meaning nothing of consequence, nothing of value.
We are also told, misleadingly, that there is an entity, which is called the Marriott, as was explained just now, emanated somehow from a major investor. It is not true. The owners of the name “Marriott” have not in any way sanctioned, licensed or given a franchise for this hotel. As far as the documents, which are made available to us, are concerned, no such document exists. Indeed, as far as we can see, the company, which is required to do the construction, has not given a guarantee that at the end of that exercise its operations will automatically be licensed by Marriott. That needs to be said. If it is indeed that is true then it should be said but the Government cannot simply build a hotel and call it Marriott on grounds that down the road it will hope that it will be a part of a Marriott franchise. There is a very specific process by which one enjoys that franchise. The idea that it is also the first major hotel company in the country, of course, is nonsense. There was Choice House Forte; there was Le Meridian, and so forth. That is the point I would like to make.
The other issue is this: That the exercise of enhancing tourism, which we are given as a major reason for establishing a hotel, is back to front. There has to be the very assets and resources, to which the Hon. Member, Mr. Irfaan Ali made reference, before the Government is going to make sure that it is going to attracting tourist. In other words, it is not the hotel that brings the tourist, but the safety, the cleanliness and the infrastructure that is associated with the facilities. It is not by building a hotel. There have been built, I am sure, over one hundred and fifty hotels since the Government started to give concessions for the construction of hotels at the time of the World Cup. We have given extensive concessions and yet the number of tourist that we entertained each year is nowhere near the numbers associated with small countries such as Barbados and St. Lucia. It is not the total number of visitors that matter; it is the tourist beds per number of population, and in that regard we are way behind. The reference point is that it is not an absolute number that matters and that is what our friends need to consider.
The biggest issue facing us here in respect of these investment projects, whether it is Amalia or the so called extension of Timehri is the failure of the Government to bring to the public’s attention the feasibility study and the economic studies which underpin these projects. As I said, they all started out with secrecy. Many of them we heard of after, even in the case of the use of resources for Timehri and for the hotel. After the budget is passed is when we hear from another source that moneys have been passed to contractors for undertaking works. This is not the way to handle the management of a project, especially if you are so sure that the returns in relation to the project are going to be positive. As regards the Marriot specifically, we have a number of questions that have yet to be answered to satisfaction; the question of the specific benefits that are expected and the question more importantly of the economic rate of return that is expected on the hotel.
The contracts and the feasibility study have not been provided in their entirety. It is not sufficient, Mr. Speaker, to call a set of politicians into a room to have a look at some numbers you have and say it is the discussion of an investment project that is of this size. You have to provide the documentation so that independent analysis can be done and the decision of all the politicians on both sides of the divide can be informed by independent analysis and not by figures that are just generated out of the top the head of a politician that either comes into a room or comes into Parliament and says what is convenient. They have to be able to stand the light of day; that is what has to happen.
As regards this particular project we know that as regards the Marriot – I am speaking to information provided by the Government itself when it provided information earlier – and the tendering exercise we are told there was one bidder. There were apparently some 23 firms that did the initial application, but how we arrived at the one firm no-one knows, at least not on this side; I have not seen that.
Also, when you look at the financing arrangement, the leverage for the hotel is very high. In other words, the equity element remains small relative to the loans and the moneys that will be borrowed. So far as that is concerned, the amount coming from the Government of Guyana is to be treated as, in the terms of the contract, a subordinate debt meaning that at the end of the exercise when moneys have to be repaid or if the project itself fails, the Government’s contribution to the exercise is met after the commercial contributors to that. So, Republic Bank for example which has organised or syndicated a portion of the loan is treated as senior debt; that is what the contract says. That means that it will have to be dealt with before the Government’s input is met. In effect therefore, the Government has or is providing a guarantee in relation to this debt. One has to take that into account in so far as you may be engaging in an investment that may not yield positive returns. It may then have consequences for the liability of the Government.
I think one can go further. It fairly clear, in Guyana, that there is a situation market for hotel rooms. I do not think anyone other than the Ministers who speak in this country can be unaware that there has been overinvestment in hotel rooms and that hotel rooms for most of the year operate at less than 40 percent capacity utilisation. Calling it untrue does not solve the problem. The fact is that most of the hotels have room rates that are low; the occupancy rates are low. In those circumstances it is important that the Government itself not contribute to investing more moneys into generating hotel space, especially when the cost per room of the hotel that is being proposed by the Government here is above the average level of a hotel that is less than 200 rooms in total. That is a very important issue; the cost at which these rooms are being constructed.
Why would you build a hotel where the average cost of rooms is above the international average that is being established? In the end you will have to be selling the rooms at rates which are not competitive internationally. If that is the case then the viability of the project is what is going to be questionable. That is what everyone is arguing. You are building additional hotel rooms purely with an eye to solving a problem that has nothing to do whatsoever with attracting more tourists, but with diverting tourist from existing hotels, some of which are felt to be undesirable politically; that is the issue. If that is the issue then you are using taxpayers’ resources really to settle political vendettas. That is wrong. We have built a number of hotels in recent times, yet we find hotel rooms not fully occupied. It is not the business of the Government to get involved in such an exercise.
We have been told again, another sleight of hand that this is a private, public partnership project (PPP), but who are the partners? In these circumstances the syndicated loan by Republic Bank hides or masks the other investors. We do not know who they are; at least I do not know who the other investors are. Who are these other investors? Let them tell us who they are. This is just a bank syndicating a loan. Until you know the other behind that loan, do not tell us about PPP, because that is not what is at hand before us.
The issue here is this, if I might recap. We are saying that national resources are needed to deal with a range of problems that face us. When the Government invests resources we have to be sure that the resources are invested in the projects that will yield the highest returns. If a project such a Marriot is expected to yield the best returns of all the possible projects then the Government should not be afraid to put all of them before us so that we can compare the rates of return. That is why the motion requires in resolution 2 and 3 that the moneys collected by NICIL and currently used by NICIL to be directed to projects such as Marriot be brought here, in other words they go to the Consolidated Fund, they will come to the House and when the House examines the budget and considers... [Interruption] It is the very Constitution that the Attorney General was so sorrowful about us infringing that he is now dismissing as unworthy.
It is the Constitution that requires moneys collected on the states behalf to be deposited into the Consolidated Fund. I am trying to explain the economical logic behind bringing them all to the same place so that we can be sure that when moneys are spent they can yield the highest returns, the incremental capital output ratios can be low so that the indebtedness, the growth of poverty and so forth can benefit maximally from the resources that are at our disposal.
The tendency of the Government to treat with these issues by way of secrecy, by not brining the technical studies underpinning these contracts – the technical studies based upon which they claim that a project such as the Marriot will yield positive returns – in the absence of that information these projects such as Marriot cannot be supported. That is why I will support and urge the House to support the Resolution especially because it also reinforces the earlier Resolution that was made. It is that this House approves the Resolutions which are part and parcel of a system. One recognises that unless you are in a position to look at the utilisation of resources through the same spectrum we are not going to find ourselves doing a great deal to advance the rates of return on Government investments. I therefore invite our colleagues to embrace a Motion and in particular to ensure that the revenues from NICIL are paid into the Consolidated Fund as already have been agreed by this House, and that no further expenditures be undertaken by NICIL through its subsidiary Atlantic Holdings Incorporated in relation to the Marriot Hotel. I believe the reasons are very sound. The House will be wise to embrace this Resolution. Thank you very much Mr. Speaker. [Applause]
Related Member of Parliament
Related Member of Parliament
Statement to the National Assembly on Thursday December 14th, 2017 by the Hon. Vice President and Minister of Foreign Affairs, Mr. Carl B. Greenidge on the Exxon “signing bonus”
14 Dec, 2017 / 1261
BUDGET SPEECH 2018 - Honourable Mr. Winston D. Jordan , M.P. Minister of Finance
27 Nov, 2017 / 1584
President’s address at the opening of the 71st Sitting of the 11th Parliament
02 Nov, 2017 / 1406