Beal to pay US$3 per acre, will get 99-year tax break
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Beal to pay US$3 per acre, will get 99-year tax break
Hoyte dubs deal humiliatingBy Gitanjali Singh
Stabroek News
May 12, 2000
Beal Aerospace Technologies will enjoy a 99-year tax holiday, pay US$75,000 for 25,010 acres of land for its primary site and US$1 per acre in easement annually for its buffer area of 76,000 acres in its proposed US$50 million investment in Guyana.
The company will also pay the government US$100,000 for administrative expenses each year as well as a graduated launch fee, which the government feels is adequate but which others including the opposition PNC has found to be paltry.
The proposed agreement, now being tidied up and scheduled for signing before month end, stipulates that if Beal enjoys no more than six successful launches in a calendar year, the government will receive only US$25,000 per successful launch; if the total is more than six and less than 12, the fee will be US$50,000 per launch; if the sum is between 12 and 18 successful launches, then the fee will be US$75,000; and if Beal has more than 19 successful launches, the fee will be US$100,000 per launch. The launch fee cannot exceed one percent of the contract amount between Beal and its customer.
The total recurrent sum the government will get from Beal on an annual basis when the operation gets going is estimated to be US$775,000 as it is felt that a dozen launches per year could be realistic. Beal is also only providing a maximum of US$400,000 for the relocation of families from the area in the Waini which has been earmarked for its spaceport project and refuses liability for any obligations imposed by any court, administrative body or arbitral panel therefor.
Deochand Narain, one of the government negotiators, said this sum was adequate, even though negotiations for relocation had not started as yet.
PNC Leader, Desmond Hoyte, yesterday released to the media a February 11 version of the government's proposed agreement with Beal, causing Prime Minister Sam Hinds, Narain and chief negotiator, Edgar Heyligar to host an emergency press briefing late yesterday evening to defend the terms.
Hoyte, who said he supported the Beal investment in principle, denounced the terms and conditions of the agreement, dubbing it "unacceptable, disadvantageous and in some cases humiliating." He called on Guyanese to reject the terms and conditions of the agreement and demand that the deal be renegotiated. The PNC, he said, would cooperate with any social group to prevent the deal being consummated in that form.
Narain, head of Go-Invest, attempted to answer the concerns raised by Hoyte by pointing out the changes made in the final draft now before the government. One such change was the striking off of any modification to the Factories Act for Beal to be exempt from its provisions.
Beal, its affiliated companies and customers will also be exempt from paying taxes including corporation, income, capital gains, property and withholding taxes and President Bharrat Jagdeo is required to sign a letter to this effect. And on the fifth anniversary of the date of the agreement the amount payable to the government will be adjusted for inflation based on the US Consumer Price Index for Urban Consumers and shall not exceed six percent per annum.
Beal is restricted from selling the 25,010 acres of land to anyone not approved by the government and does not have exclusive rights to the buffer zone as was promised. The government has the first right of refusal in any sale of the land by Beal.
Beal has undertaken, under the proposed agreement, to source as far as possible its goods and services and employees from Guyana with preference to be given to employees from Region One. The company will also endeavour to train local workers.
Hoyte's concerns included the sale price; the launch fee; the easement rate; Beal's refusal to accept liability for obligations imposed by any court or administrative body as it related to compensation; Beal getting automatic launch approval (the government has clarified that this is not the case) and that no one can revoke the agreement (the government team said this is not the case). Hoyte said the proposed agreement made a mockery of Guyana's Customs and Immigration Laws, but Narain said these sections have been amended.
Hinds stated that the document Hoyte used was one in a series of draft agreements considered at various stages of the negotiations and there were two drafts since, on February 25, and April 20, 2000.
The Prime Minister said the government shared the same concerns as Hoyte and had advanced the negotiations well beyond the document Hoyte spoke of. He said it was important that issues be put into perspective and expressed the view that the government and the opposition were not really far apart.
He held out the Beal investment as one that will build confidence in the investment climate for Guyana and will create substantial employment as well as enhance technological development. He said that the government valued the continuing interest of the opposition and social partners but that ultimately, the government must make the final judgement call and fulfil its obligations.
Hinds said that the launch fees were adequate given that the government was not investing its resources into the project. And Narain said that the US$3 per acre for the 25,010 acres (total US$75,000) has to be seen in the context of the US$1 per acre in easement annually. He said the current acreage fee is US$0.10 per acre.
Hinds also said that the 99-year tax holiday was needed to attract the investment to Guyana. The government feels that the spin-off benefits for Guyana will outweigh the recurrent revenue the country will receive.
