Guyana loses potential US$100M spaceport deal US govt subsidy of NASA cited By William Walker Stabroek News October 24, 2000 Guyana's hopes of becoming a player in the satellite launch industry crumbled yesterday with the news that Beal Aerospace Technologies Inc (BAT) has ceased all moves to develop a commercial programme. In a shock announcement, the Dallas, Texas-based American company released a statement yesterday citing the main reason behind the decision as unfair competition from the US government-subsidised NASA. Beal was to have invested some US$100 million in a spaceport facility in the Waini River in Essequibo for the purpose of launching commercial satellites. But in a press release yesterday Beal's Chairman, Andrew Beal, said that the most insurmountable risk to commercial viability "is the desire of the US government and NASA to subsidise competing launch systems. NASA has embarked on a plan to develop a second generation launch system that will be subsidised by US taxpayers and that will compete directly with the private sector." The release stated that US$290 million had been recently approved towards NASA's satellite projects over the next five years. The statement also cited "uncertainty over US government State Department approval to launch from our own facilities in the foreign country of Guyana. "... Despite our experience with cost overruns and schedule delays, we were confident of our ability to ultimately succeed in the development of our BA-2C rocket..." It appears, however, that Beal was experiencing considerable financial difficulties with its space programme. Only two weeks ago it had issued a press release stating it was laying off 80 workers--over half of its workforce. That statement, dated October 14, said the simultaneous "development of all components of our new BA-2 launch vehicle had been... unproductive resulting in unnecessary delays and costs." It quoted Vice President, David Spoede, as saying that the Guyana launch facility remained a Beal priority and the scheduling of the project was on target. Kit Nascimento, the recently-appointed public relations consultant for Beal in Guyana, said "the development was a grave disappointment for Guyana and a serious loss of a potential investment which would have been the largest since independence." Nascimento said the withdrawal should be seen in the context of a serious collapse of the commercial space industry. One large US accounting firm noted recently that "the bloom had come off the space industry's rose." Nascimento observed that all those persons who said the government could have negotiated a better deal should now realise the precarious nature of the space industry and acknowledge that Guyana was fortunate to have gone so far in attracting such an investor. Under the agreement signed on May 19, the 25,000-acre primary site purchased by Beal will now revert back to the government. Clause 5.7 of the deal states that the immovable property will be reconveyed to the Government of Guyana in the event of termination of the agreement for any reason or no reason at all within three years of signing, upon reimbursement by Guyana of the amount paid to Beal for such immovable property. "No reimbursement will be made to Beal in respect for the easement fees for the activated buffer zone," Nascimento said, but this would have to be negotiated. Nascimento related that the government had received payment for the leasing of the 75,000-acre buffer zone at US$1 per acre. The only solace Guyana could take from the episode, Nascimento said, was that "when the space industry recovers Guyana is on the map as a good place for a spaceport." He said the cadastral survey of the area was of considerable value to the government. He said Guyana had lost nothing as all negotiations had been done by salaried government employees and legal assistance came from the Attorney General's office. Beal owed no monies for any services contracted, he added. Prime Minister Sam Hinds told reporters at Public Buildings yesterday that it was important to learn that there were always risks associated with business. He said he was not entirely surprised by the development given recent articles expressing concerns for the industry. Still, Hinds said, he had pressed for non-exclusivity in the clause, so Guyana was still in a position to welcome other satellite launch companies. PNC leader Desmond Hoyte said it proved what he had been saying all along; that Guyana should never have gotten into a deal with a company that according to his research had no assets or track record in the space industry. He said the government should be thoroughly ashamed of this tragi-comedy. "We have become the laughing stock of the Caribbean." He also queried the contention that the deal had cost the country nothing, claiming that the government had asked Parliament for $11 million to finance meals and public relations programmes related to the deal. Dr Frank Beckles of Guyana Is First (GIF) which filed a lawsuit opposing the deal, stated: "GIF insists that any negotiated agreement be done transparently and never again in absolute secrecy. We await the government's indication of penalties to be imposed upon Beal following its default. This failure confirms the valuable role of NGOs in defending the integrity of the country. The GIF will be consulting with its lawyers regarding the lawsuit." The 'Beal deal', as it came to be called, sparked a huge controversy when it was first revealed that the investor would be spending a mere US$3 per acre for the 25,010 acres of land and that fees for each successful launch were potentially only $25,000. Beal was to enjoy a 99-year tax holiday. There were also concerns over the environmental impact. The government countered that Guyana was making absolutely no investment and was guaranteed revenue even if Beal made no profits. The project would create 500 construction jobs and 200 long-term positions. They argued that Guyana could become a recipient of other high technology industries. Venezuela had also protested the establishment of the foreign-owned space port in the Essequibo, arguing that it could develop into a US military base. Venezuela has renewed its claim to that region rejecting the 1899 Arbitral Award which set the border between the two countries. Beal's decision to choose the remote region just off the Atlantic Coast was because of its latitude position close to the equator, which would have allowed for heavier payloads to be sent into space at a lower cost since the rocket's trajectory to reach orbit was shorter. The BA-2C rocket, propelled by an innovative hydrogen peroxide/kerosene propellant mixture, could carry a 40,000 lb satellite. Follow the goings-on in Guyana in Guyana Today