That 20 per cent in GT&T

The following is Kaieteur News editorial of July 16th 2009

The decision by the Guyana Government to sell its 20 per cent share in the Guyana Telephone and Telegraph Company (GT&T) has caused some stir in the society, particularly at the level of the politicians. The economists are so far silent.
When the government made the announcement, first through the Head of the Privatisation Unit, Winston Brassington, and later through a press release, its main argument was that the company was very profitable at this time and that now was therefore the best time to sell.
But there was another side to the decision. The government said that over the years its representatives have been sitting on the board, they have failed to make the rest of the Board of Directors take their considerations aboard. In short, they felt that they were just there to make up numbers and had no influence whatsoever on the discussions or the deliberations.
One would believe that even if the representatives feel that they can in no way impact on the operations of the telephone company, at least they were being privy to the inside workings of the company; they were aware of the various decisions that would involve the use of funds.
The politicians appear to be more concerned with the money accruing from the company, which, in the words of the head of the Privatization Unit, is very profitable. Ever since 2000, the company has been paying dividends to the government. The company was bought by Atlantic Tele Network in 1991.
At the time of the sale the company was given a ten-year moratorium on dividends while it improved what was in effect an ailing communication system. The government has since announced that from the time dividends have been paid, the returns have been between US$1 million and US$4 million. Last year, the local company paid $256 million in dividends. That is about US$1.28 million.

The telephone company has been saying that the dividends could have been more if the government had clamped down on the illegal communications setup that seem to abound. Whatever the case, the politicians are of the view that given the global economic crisis it was better for the government to keep its shares in the telephone company because it would represent a source of revenue at no risk to the government.
From an economic point of view, that may be wise, but the government feels that if it gets its money in a lump sum then it could undertake much more. The politicians feel that the government has an ulterior motive.

It is now known that the GT&T parent company has no intention of buying those shares. It was known that the government had a certain price that it wanted for its shares. The head of the Privatization Unit had also caused to be stated that the government was not prepared to accept any price. The politicians are now of the view that the government priced the shares at a level that was high enough to deter the parent company from buying them and it is here that the politicians believe that the ulterior motive would be put into effect. Already, there is talk and a lot of it, that the government may be seeking to divert more of state assets to, as the PNCR said, to its cronies.
One question is, “Why should there be a problem with the government divesting itself of assets?” Former President Desmond Hoyte had once said that government should get out of business because it is not good at that. The present government seems to be doing just that. But the opposition seems not to be having any of that. Mr Robert Corbin has signaled his party’s intention to go to Parliament to seek to stop the sale of the shares.

He had also said that the shares should be sold to the workers. It would be interesting to see if the workers can pick them up for whatever price the government asks—and the apparent asking rate is US$40 million.
If indeed the asking price is US$40 million then at the present rate, the government would have collected this sum over somewhere between eight and 20 years. With devaluations and the like, this money would be worth much less than it does today. The government may be wise to sell today.
Perhaps the government should release those shares to the wider public in the same way some of the commercial banks did some years ago.