Deal to launch satellites inked
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Deal to launch satellites inked
Beal to invest US$100M
Environment impact report due in 12 to 18 monthsBy Gitanjali Singh
Stabroek News
May 20, 2000
The government yesterday swiftly signed a controversial deal with Beal Aerospace Technologies for a US$100 million spaceport in Region One and will grant the firm an interim environmental permit to start draining the site.
Seen as catapulting Guyana into the 21st century and placing it on the cutting edge of high technology, the agreement has been heavily criticised for being low on financial returns and other benefits to the country. Launching of satellites from Guyana will put this country in a coveted, exclusive club.
Beal, through its subsidiary Beal Guyana Launch Services LLC (a Texas-based firm), will apply immediately to the Environmental Protection Agency for the interim permit to drain and clear the area on the coast between the Waini River and the Atlantic Ocean.
The firm has already retained ICF Consulting to do an environmental impact assessment, and the results from this are expected in a year to 18 months. ICF was the company which did the assessment for Sombrero Island - which Beal had originally scouted - and is rated as the number one environmental consulting firm for the space industry.
The signing of the deal took place amidst tight security at Prime Minister Sam Hinds' office, with Hinds signing on behalf of the government and Vice-President of Beal Aerospace Technologies, David Spoede, affixing his imprimatur for his company.
The opposition People's National Congress last evening threatened to use its "full political might" to ensure that the deal did not materialise. A statement from the party said that it would support the efforts of all other groups in their objections to the agreement.
"The PNC wishes to repeat its position that while we welcome appropriate foreign investment, we are opposed to this ... incompetent sell out of our national resources," the statement said.
Neither Hinds nor Spoede entertained questions from the media at the signing, but Spoede said the project costs the government nothing and all the risks are borne by the investor. He also said that the investment ought to be looked at as an opportunity for Guyana to develop its potential and to send the right signals to other investors.
Hinds on the other hand, emphasised the financial model the government adopted as being a critical factor in attracting launching companies. "Because Guyana is unable to build its own spaceport, the government's policy is to offer substantial and attractive incentives for satellite launch companies to build their own...," Hinds stated. He said that the model the government had adopted had freed it from depending on Beal making a profit to get any revenue from its operation. He also pointed out that 30% of the US$100M investment cost will remain in Guyana.
And Spoede, speaking with Stabroek News last evening, said that Beal's original position was that it was not prepared to pay any launch fee to Guyana and the US$3 per acre for the 25,010 acres of land was fair market value. He also underscored that Beal will not have any rights to the 76,000-acre buffer zone but will be paying US$1 per acre in easement.
As to the 99-year tax holiday the firm will enjoy, Spoede said the government offered this to the firm to invest here. He said that Beal had argued to the government that it would not be making money in the local operation, but rather in the assembly and manufacturing and as such could not pay taxes in Guyana. However, Spoede indicated that this did not find favour with the government's chief negotiator, Edgar Heyligar, and as a compromise the government offered the tax holiday.
Spoede said he was in no position to say how long it would take Beal to recover its investment in Guyana because of the high-risk nature of the satellite business.
On the other hand, Spoede said that it was in Beal's interest to invest in institutional strengthening in Guyana's education system so that it would get its own supply of technical skills. He said the company was not willing to put an amount in a contract, but would be investing in Maths, Science and Technology as part of its civic responsibility.
And the company was not opposed to getting involved in a preservation programme for the natural resources in the interior but Spoede said this had not been raised with it by the government.
Having signed the deal, the company will now be consulting with local leaders in the city and Region One on its development plan and will be aggressively pursuing the US State Department's approval of the transfer of technology to Guyana as well as getting the environmental impact assessment started. No estimate of when satellites would be launched from the Waini in the north west was given.
Guyana's recurrent revenue from the deal once Beal starts to successfully launch satellites is expected to be US$775,000. However, in the initial period, this sum is expected to be in the vicinity of US$175,000 per year. It will receive US$75,000 for the sale of the land now.
The agreement Beal had with Sombrero Island (Anguilla) was to pay a flat lease of US$280,000 per year. There were no launch fees in the agreement.
Spoede indicated that the satellite business was extremely competitive and NASA had instructed that costs come down from US$85 million for launching a satellite to US$8.5 million in the next ten to 20 years. Hinds in alluding to this had said "the multi-billion dollar Iridium LEO (Low Earth orbit) communications investment launched in 1997, with great expectations, has proved a financial disaster. There is a very real danger of the number of satellite launching companies exceeding the demand for satellite launches".
The deal with Beal will not be considered closed until the Environmental Protection Agency issues an environmental permit for the operation.
