Category: Letters to the editor

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Only $1,000M was requested for GPL’s operations and the National Assembly approved that; the warning of a tariff increase is nothing but scare tactics

Now more than ever I lose hope and faith in our politicians whose words speak louder than their action. But then I see some dishonesty, chicanery or fabrication that upsets me and makes me take up my pen.

In today’s (April 23) Stabroek News Messrs Brassington and Bharat Dindyal, Chairman and CEO respectively of the mismanaged Guyana Power & Light Inc are threatening a 17% tariff increase because of the $5.2 billion cut by the National Assembly. The reasons they give are so dishonest that I cannot help but recall the feigned outrage by Messrs ‘Fuzzy’ Sattaur and Martin Goolsarran when the NCN subsidy was cut last year.

Mr Dindyal was reckless enough to accuse the parliamentary opposition of “a poor understanding of the company’s operations.”

In fact it is more than likely that it is because they not only understand but know that the GPL is among the most poorly operated and managed companies in the history of Guyana that the opposition is reluctant to put $11,255 million in the company in 2013, following the $6 billion in 2012 for which there has been no accounting to date.

Assuming as I do, that Messrs Dindyal and Brassington are not dishonest, then it is they who do not understand. Here is what the Minister of Finance said in the 2013 Budget Speech about the $11,250 million to GPL.

“Budget 2013 therefore provides operating and capital transfers to GPL totalling $5.8 billion to support that company in meeting its cash flow requirements. It is worthwhile to mention that, in addition to the $5.8 billion budgeted to be transferred to GPL in 2013, Government is also budgeting a further $5.4 billion to be provided to GPL to support key projects such as the upgrade of its transmission and distribution network, the loss reduction programme, and other activities required in anticipation of the AFHP.”

They so comingle money that they probably do not even realise that only $1,000 million was requested for GPL’s operations.

The National Assembly approved that sum in full. It is nothing but scare tactics for Mr Brassington to warn about a potential tariff increase following the cut of $5,800 million which, knowing our parliamentarians, will be restored sooner rather than later, as happened last year.

And let me reassure Mr Dindyal that Guyanese understand what is going on in GPL including:

1. That at December 31, 2010 the company had an accumulated deficit of $2,008 million and was indebted to the Government of Guyana for $9,035 million in long-term liabilities, $1,189 million in current liabilities and $402 million in taxes payable, making a total owing to the Government of $10,626 million. The company’s indebtedness would surely have increased in 2011 and 2012, in addition to the $7,500 million it received by way of budgetary allocations in those years.

2. That over the approximately six years of the Brassington-Dindyal partnership at the helm of GPL, line losses have remained stuck at around 32% when they should be no more that 15% -18%. In other words inappropriate policies and inept management at GPL are costing the country in the range of $5,469 million and $6,641 million per annum, based on 2010 turnover.

3. That GPL has failed to table its 2011 Annual Report in the National Assembly which was due by the middle of 2012. The National Assembly should have told the Prime Minister to go and bring the report before we entertain any request.

5. That the cost of fuel in 2013, which accounts for a significant part of annual expenditure, is projected to be less than in 2012.

6. That the company’s procurement is no less tainted than national procurement.

7. That the management is not only incompetent but also overpaid. In 2010, twenty-nine management staff were paid a total of $271 million plus perks. This works out at $9,400,000 per year per person. That would have gone up in the two years since.

8. That GPL does not have the power to increase rates but only the Public Utilities Commission and only after public hearings. Maybe Messrs Brassington and Dindyal should put their threat to the test and open themselves to examination.

Finally, the duo’s spuriously precise 17% tariff increase reminds me of my days in Grenada when Bernard Coard advised me, “Chris, don’t say around 50. Say 47 or 53. People will think you are being honest and accurate.”

Conditional on the granting of any transfers to GPL, the National Assembly should have demanded the firing of the entire Board of GPL and their replacement by competent individuals. Messrs Brassington and Dindyal may mistake the temerity of our politicians as stupidity of our people. We know and understand what is taking place. And it is not good.

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Serious questions remain on the exploding cost of the Amaila project

I welcome Mr. David Gopaul’s letter (‘Ram is attributing additional costs to the Amaila hydro-project based on pure speculation’ SN April 18, 2013) for providing me with the opportunity to ask him to obtain and share vital information about Amaila which Guyanese have for years been seeking. Before doing so I will briefly address his lengthy letter.

One approach could be to quote Mr. Gopaul’s preferred article in Hydro Review magazine which set out Canadian cost models for hydro projects that are conceptually, in terms of both engineering and financing, and technologically, different from Amaila; or I could choose to provide cost information on projects from the USA, Ethiopia, China and Turkey, which in each case is lower than Amaila’s. I could even refer him to Brazil which built a project of approximately the same size and capacity for US$350 million or US$2.2 million per MwH, or to the recent contract between Nicaragua and Eletrobras, the Brazilian state-owned utility company, to build a 250 MW hydroelectric power plant in southern Nicaragua, at a cost of US$700 million, or US$2.80 million per MwH. But I won’t because the explanations are right here in Guyana.

In writing on the subject of Amaila Mr. Gopaul can recall what I said about the PPP/C 2011 manifesto but conveniently forgets what has been said and written not by informed critics of Amaila’s exploding cost but by its very own sponsors. Here is what the Champion of the Earth and the opportunist “investor” Fip Motilall told the Hydro World in 2007: “The hydro project is expected to cost US$300 million, with a third of that devoted to building transmission lines to carry power from Guyana’s remote inland to its population centers.” Since the line would be almost the same for 100 or 165 MwH, the explosion in the cost would be mainly the plant.

And if Mr. Gopaul has problems with the Champ and Motilall as so many people do, let me draw his attention to a letter by Raphael Herz and Brian Kubeck of Sithe Global who on February 29, 2012, responding to a letter by Ramon Gaskin in the SN of February 14, 2012 wrote, “Mr Gaskin questions the cost of the Amaila Project, suggesting that a hydropower plant of this size would normally cost between $320 million and $360 million….. In this case, the construction cost of the hydropower facility of the Amaila project is in the range that Mr Gaskin suggests (emphasis added).”

If that does not convince Mr. Gopaul, then I cannot help him. Now for my questions to him:

– Does he consider the model proposed by Motilall/Sithe/Chinese the best technical and financial option to produce an optimal hydroelectricity facility at Amaila?
– Does he know and is he convinced that the technology to be used in Amaila would be state-of-the-art and not like the elephant the Chinese built at Skeldon for GuySuCo?
– Has he seen all the documents on the Amaila Project and if not would he join the call for these to be tabled in the National Assembly?
– Can he say when the final licence for the Amaila Project required under the Hydroelectric Power Act was or will be issued, and similarly for the Power Purchase Agreement between Amaila and GPL?
– Is he aware that Sithe has defended Amaila Project on fuel reaching US$200 per barrel while the current cost is under US$90 per barrel and the 20-year outlook is for reduced demand due to technology and alternatives?
– Would he please provide hard information to contradict the calculation that Amaila will cause the electricity tariff to increase for several years?
– Does he believe that Banks DIH, DDL and all those entities which have disconnected from the national grid will automatically return because of Amaila?
– Does he share the optimism that when Amaila comes on stream that Linden will automatically receive power from the National Grid and pay the national rates?
– Does he know of any public project that is feasible with borrowings at 8.5% and return on investment of 19%?
– Does he know of any government-guaranteed project which carries risk insurance of 12% of the project cost?
– Does he consider as realistic the assumption that GPL will reduce losses from 32% to 20% in six years time?
– Can he share with Guyanese his understanding of how power from Amaila will be distributed to Essequibo and the hinterland communities?
– Can he share with Guyanese his knowledge of how much of its existing plant and current fixed and operating costs GPL will continue to carry when Amaila starts to produce?

If Mr. Gopaul or anyone else would like a debate on Amaila, I respectfully suggest they have relevant and not pseudo-facts. And just in case Mr. Gopaul does not know the answers to my questions, I am sending a copy of this letter to the Prime Minister for his comments and response.

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Not a watershed budget for the poorer person

As Guyanese analyse the Budget for 2013 it is useful to compare some of the numbers with how they are presented and received. There is no group which has welcomed the Budget more than the Private Sector Commission, one representative describing it as our (PSC) budget.

Let us take the apparently straightforward example of the reduction in the rate of personal income tax from 33⅓% to 30%. Readers will note that not only do individuals not have the benefit like dependents allowances while companies are allowed to deduct almost all their expenses, but the individual is still paying the same or higher rate of tax than non-commercial companies do, that is 30%.

If we exclude the personal allowance of $50,000 per month an individual’s nominal and actual tax rate is the same: 30%. Compare this with say GBTI whose nominal corporate tax rate is 40% but which enjoys a host of tax shelters. Its effective corporate tax rate for 2011 is 26.82%. Shareholders of GBTI pay no tax on dividends while its employees pay 30%. Even if we say that the company and the shareholder are the same – which it clearly is not – the shareholders’ tax rate is 26.82%. That is inequitable.

But let us get back to the benefits of the reduction in the rate of income tax and the increase in the rate of NIS, both of which impact on take home pay, or as the PSC says, spending power. In dollar terms, for each $10,000 earned by the worker the tax saving is $333. It means this: the worker who was earning $50,000 per month at December 31, 2012 gets nothing out of the budget; one who earned $60,000 per month takes home $333; one who earned $80,000 takes home $680 more, etc. The earliest point at which the increased take home pay exceeds $10,000 per month is for employees earning $380,000.

Note that I have not taken the projected inflation of 3.5% for 2013 into account. If that is done the income level at which there will be a net saving is for employees earning $296,000 per month. All persons earning below that income per month will actually be worse off.

The PSC is right: this is a watershed budget – but not for the poorer person.

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The AG is the principal legal advisor to the government not the state

Even as one who still spends time teaching, I find it hard to engage Mr Anil Nandlall, Attorney General, not only because of his proclivity for misunderstandings and misrepresentations (on the Budget cuts, on the Lotto Funds), but also because his frequent pronouncements show extremely poor acquaintance and at times no acquaintance, with the finer points of the Constitution, and because of his chameleonic quality of rearranging facts to fit his circumstances. There was a convergence or, to use one of Mr Nandalall’s words, a concatenation, of these qualities in the recent news items in which he sought to arrogate for his office, authority over Bills passed by the National Assembly (SN, February 3, 6).

Let me recap the issue of the Bills that exposed Mr Nandlall and caused him to restate/reconfigure his story three days later. He told Stabroek News on February 3, 2013 that “The opposition bills have not reached the Attorney General’s Chambers… for [his] inputs.” Up comes the Clerk of the National Assembly saying not true: the Bill was there ever since. Cornered by facts, Mr Nandlall’s story changes to, “okay, but not on my desk” (February 6).

Meanwhile, by letter of February 4 in the press I noted for the benefit of the public, and hopefully of Mr Nandlall, that a Bill passed by the National Assembly is not an opposition or government Bill but that of the National Assembly. And that contrary to his claim of jurisdiction over Bills passed by the National Assembly, the Constitution and the Standing Orders of the National Assembly vested certain powers and duties only in the Clerk of the National Assembly (custody and despatch to the President), the Speaker (to correct patent errors), and the President (to assent or explain). While it is evident that Mr Nandlall was unaware of these finer points, Guyanese expect their Attorney General, whoever s/he might be, to appreciate the dangers of tampering, or of delaying tactics by a political appointee, thereby frustrating the constitutional requirement for the President to assent or explain within twenty-one days.

But here again Mr Nandlall’s elusive qualities come to the fore. Here are some of his unbelievable responses. He explains his loose nomenclature of opposition Bills as “descriptive labels … widely used in parliamentary Standing Orders the world over.” Mr Nandlall is obviously less informed about Guyana than he is about the world over, since the “descriptive labels” are used in Guyana only when a Bill is “introduced” as a Private Member’s Bill (Standing Order 51); or “presented” on behalf of the government (Standing Order 53). Since Guyana by itself is proving to be so onerous to Mr Nandlall, it is recommended that he leaves “the world over” to those who know a thing or two about it.

Caught as a central violator of the provisions of the Standing Orders and the Constitution, Mr Nandlall scurries for refuge in what he calls conventions “from the colonial days.” A little learning is truly a dangerous and damaging deficiency. In Mr Nandlall’s “colonial days,” there was no 21 days limit and Bills were required to be assented to by the governor, who was not a member of either chamber, called the Senate and the Legislative Assembly. Mr Nandlall might wish to refer to Dr Shahabuddeen’s discussion on the role of the governor under the 1961 Constitution on page 546 of his book Constitutional Development in Guyana 1621-1978. Under the 1980 Constitution there is a 21-day deadline for the President to assent or explain, while Article 51 of the Constitution makes the President an integral part of the Parliament.

But more importantly, I hope for Mr Nandlall’s sake that he would not argue, even in a corner shop, that a convention of limited historical validity can trump Standing Orders recognised in Section 9 of the Constitution Act, or the Constitution itself which is the supreme law of Guyana. There are many learned articles, textbooks and treatises (Dicey, Wheare, Jennings, Phillips, Fiadjoe, etc) on the place of conventions in any constitutional environment, whether one having a formal written constitution or one governed by an uncodified constitutional regime. They are easily accessible and comprehensible to the average person.

While asserting a convention violative of the Constitution and the Standing Orders as “having great utility,” Mr Nandlall’s conscience suffered no discomfort in his recent rejection of one of the most ancient parliamentary conventions, that resignation should follow a vote of no-confidence. And let me share with Mr Nandlall another convention which his government has rejected out of hand: that while a head of state can either assent or withhold assent, by convention, assent is always granted and not withheld. I now wait to see whether Mr Nandlall will compare this with the veto. He just might…

Shockingly, Mr Nandlall does not seem to know the basic functions he is appointed to perform. In order to buttress his misconceived assertion of authority over Bills passed by the National Assembly, he claims that he is “the principal legal adviser of the state apparatus.” Mr Nandlall is not. In fact, he is the principal legal adviser to the government (Article 112 of the Constitution). Maybe the Interpretation and General Clauses Act does not provide a definition which could help Mr Nandlall, but surely Article 106 of the Constitution dealing with the resignation of the “Government” should have guided him. In management there is an axiom that if you do not know your job requirements, you cannot do it.

All in all, Mr Nandlall’s positions are so devoid of rationality or consistency that he forgot that only recently he took the Speaker of the National Assembly to court. By his latest definition of his job as Attorney General, the man has taken his own client to court!

As we have come to learn, attorneys general are no longer blessed with the same judgment on the wisdom of silence as those of yesteryear. Hopefully, Mr Nandlall will learn as he goes.

Let me end by saying that I believe that the perpetuation of much of what we as Guyanese receive daily from the government and the Attorney General is a result of a largely ineffective political opposition and its battery of lawyers. Let us hope that they will not remain silent on this issue which involves a Bill they introduced and which involves both substantive and procedural constitutional points. And I hope too that the Speaker of the National Assembly Mr Raphael Trotman will now accept and carry out his duties in relation to Bills, seeking whatever advice and assistance he may require.

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Ramson’s opinion as AG was solicited on a private lottery not a government lottery

Unusually for Guyana, Mr Charles Ramson SC uses the honorific ‘Justice’ to subscribe his letter ‘Solicited opinion that the government share of the Lotto funds does not have to be placed in the Consolidated Fund has now been given the blessing of a High Court judge’ (SN, January 15).

Despite having occupied such an exalted position, Mr Ramson still seems unable to accept certain basic facts as well as the relevant constitutional and statutory provisions in the entire Lotto funds issue, including the case to which he refers. Let me try to clarify some salient points for him.

In 1996, some time around which Mr Ramson had his first stint as Attorney General, the Government of Guyana and Canadian Bank Note Ltd signed an agreement under which the company’s wholly-owned subsidiary, the Guyana Lottery Company Inc, was granted permission to operate a lottery in Guyana. Under the terms of the agreement, the company pays to the Government of Guyana a licence fee of 24% of gross revenues, decreased by the amounts of any additional fees and taxes.

The question which the court was asked by Mr Desmond Trotman to address in the Lotto case is whether the 24% is subject to Article 216 of the Constitution of Guyana. That article requires that:

“All revenues or other moneys raised or received by Guyana (not being revenues or other moneys that are payable, by or under an Act of Parliament, into some other fund established for any specific purpose or that may, by or under such an Act, be retained by the authority that received them for the purpose of defraying the expenses of that authority) shall be paid into and form one Consolidated Fund.”

In what he keeps repeating is a “solicited opinion” given by him on May 19, 2010, Mr Ramson as Attorney General advised that the funds received from the Guyana Lottery Company were not required to be deposited into the Consolidated Fund.

It is more than surprising that Mr Ramson who holds such a high opinion of himself and which he thinks is shared by others would make the elementary mistake of not properly and adequately checking the Government Lotteries Act Cap. 80:07. This Act, which permits and regulates Government lotteries provides the following unambiguous definition of “Government lottery”:

“Government lottery” means a lottery organised and conducted by the Government Lotteries Control Committee under the provisions of section 3 of this Act“ (emphasis added).

But instead of staying faithfully with that definition, Mr Ramson refers in his opinion to the Auditor General the following definition in the agreement:

“A lottery organized and conducted under the provisions of Chapter 80:07 Laws of Guyana.”

No clumsy, procrustean or perverse attempts to circumvent the Guyana Lotteries Act could succeed since only a lottery “organised and conducted by the Government Lotteries Control Committee” comes within the definition of the Act. The lottery on which Mr Ramson’s opinion was solicited is one organised and managed by the Guyana Lottery Company Limited, a private company. It could not therefore be a government lottery, even by Mr Ramson’s strained definition.

But this was not Mr Ramson’s only error. In referring to a Development Fund of Guyana to buttress his flawed opinion, he does the opposite and actually weakens his case. Had he done basic research he would have realised that there is no such fund in Guyana, nor has any been in existence since 1966 when an earlier Development Fund set up for the colony of British Guiana was abolished.

With a modicum of diligence, Mr Ramson would have discovered that there is no Development Fund of Guyana whether under the Constitution, the Financial Administration and Audit Act Cap. 73:04 or the successor provisions in the Fiscal Management and Accountability Act No 20 of 2003. The latter makes it pellucid and mandatory that all public moneys raised or received by the government must be credited fully and promptly to the Consolidated Fund. The only exceptions, none of which applies to the 24% received from a private company, are:

(a) moneys credited to an extra-budgetary fund set up under enabling legislation establishing such a fund;

(b) moneys credited to a deposit fund established by the Minister into which public moneys are paid pending repayment or payment for the purpose for which the moneys were deposited; and

(c) any fund established for any specific purpose by or under an Act to be retained by the authority receiving the money to be used for the purpose of defraying the expenses of that authority.

But Mr Ramson’s most egregious error was his failure to recognise that the Constitution is the supreme law of Guyana and its provisions, including Article 216, cannot be swept aside by the terms of any agreement however clearly or ineptly drafted.

Unfortunately for Mr Ramson, he did not stay silent even with the embarrassment of such elementary errors. Without the benefit of a written decision of the judge or his presence in the court when Justice Diane Insanally gave her ruling on a preliminary point, Mr Ramson claims that his opinion “has been given the blessing of a High Court judge.”

If Mr Ramson would exit the fantasy land in which he “sedulously sought refuge” he would realise that the learned judge did no such thing: she simply ruled on a procedural point only; and he would also learn that that ruling has been challenged. Incidentally one of the grounds of appeal is the judge’s reliance on what is considered a flawed point handed down by Mr Ramson himself while he sat on the Court of Appeal.

Unhelpfully for his legacy that was the closing case Mr Ramson included in his book In Pursuit of Justice – A Collectanea which he thinks secured his expertise as a legal mind.