Moves are being made by government to invest approximately $15 million into the state-owned Gravel and Concrete Emulsion Production Corporation for its viability after a failed attempt to enter into a Public Private Partnership (PPP) arrangement with a Trinidad businessman.
This was disclosed by Minister of Infrastructure Development, Public Utilities, Energy, Transport and Implementation, Gregory Bowen to reporters at last week’s post-Cabinet press briefing.
The senior government minister said that the PPP arrangement with Trinidadian Lindsay Gillette was not successful as the ruling New National Party (NNP) administration feared that the deal would not have served the best interest of the country.
“Instead of a real Private Partnership, the arrangement (with Gillette) went along the lines of a company. It had components of the company”, Bowen said.
“The idea of a PPP is that after the period has elapsed, you hand back for a token amount of one dollar,… hand back…operations to the state, but in this case, we could not get that in the agreement, that however you craft the arrangement, whether it’s part company, part PPP, that you would hand back to the state for one dollar.
“We could not get that in. It means 20 years from now the person who managing at the state (level) may have had to pay a significant sum just for getting back.
According to Minister Bowen, Government’s intention in the arrangement with Gillette was to have the state “manage the rate of extraction” which would have protected the interest of the workers if stocks were to deplete before the official end of the PPP.
He explained: “What we are saying is that we must know exactly where we are and we must be able to slow down the rate of sale abroad so that the local persons will not have to then import material at a higher price…we could not get that into the (agreement), that was one of the biggest stumbling block”, he said.
The No.2 man in the NNP regime announced that the $15 million investment by government into Gravel & Concrete will help facilitate a better block making plant and proper equipment to provide a better service for construction contractors who have expressed disappointment in the deficiency of Gravel and Concrete over the years.
Bowen stated that the time has come for Gravel and Concrete to be brought up to par in light of anticipated increased activities in the economy.
The hope, he said is to put the state body on a better footing “so we have better blocks, better concrete etc”.
“At one point in time, Gravel and Concrete was the cream of production in Grenada but now you have many other corporations. Nothing is wrong with that, but Gravel and Concrete has fallen in their standard and we must come back up.”
“The contractors out there are saying that we need services and materials from Gravel and Concrete that the PPP could’ve given because the private partner could have invested into the company but since we don’t have this now, the government must step to the plate and we may have to ask the Minister of Finance, certainly, to invest in the trucks, in the pumps, the concrete trucks, in the block making facility.”
Government has replaced the old board of directors and replaced it with a new one headed by Accountant General in the Ministry of Finance, Quinta Charles.
Other members of the board include Francis Mahon, the operator of M&N Hardware in Hope, St. Andrew, as well as Raphael Purcell who is associated with L.A Purcell and accountant Isha Abraham, former Director of Audit, Carriacou businessman, Donald Matheson, and Permanent Secretary in the Ministry of Infrastructure Development, Patricia Clarke.
A representative from the Technical & Allied Workers Union (TAWU) will also serve on the board.
According to Minister Bowen, the new board is expected to have a strategic focus to ensure that Gravel and Concrete serves the general public.
He made specific mention of another state-run body, National Water and Sewage Authority (NAWASA) which is a beneficiary of EC $125 million from the Green Climate Fund (GCF) to help upgrade water systems throughout Grenada, Carriacou and Petite Martinique.
He believes that the two state entities could work together in that the aggregate used by NAWASA to build dams could be supplied by Gravel and Concrete, which will bring in millions in revenue to the coffers of the corporation.
“If they (Gravel & Concrete) could secure the sale of all the aggregate, they will be getting revenues of 20, 30 million dollars and if they buy the concrete prepared by Gravel and Concrete, then the sale component will go up”, he said.
“… I have spoken to the board of NAWASA and I have asked them to look specifically at what they can do to ensure that they get the right type of material from Gravel and Concrete. So, we have two statutory bodies now – one we looking for re-service and may even be taking some stake in the management of certain aspects of the facilities that would provide the material to them and Gravel and Concrete will be getting a source of increased revenue, not only increase but large increase revenues”, he added.
The new board will serve for a period of one year, according to Bowen because government is “still open to a PPP that will serve both the Private Partner and the State.”
In responding to the question of why a PPP is so important for Gravel and Concrete, Bowen told reporters that the level of investment needed for such an operation would be too much for government as it is “agreed that our exposure to PPP must not be more than 5% of GDP.”
“If we put $15 million in, this will be the start, then the PPP must work … and put in another $20 million because we’re targeting let’s say all the GCF funds … hundreds of millions but you will want a big investment.
“We’re putting the 15 to give us the start to supply our local industry now but … we’re still looking for a partner who will come in and say, yes I’ll put in (the) massive amount you need and I could get all the sales in the NAWASA programme.
“In fact, if we have a statutory body that could find a significant sum, that will be a beautiful trend to take because we will have a state-owned company put in the money and reaping the benefits of it but if the state has to put it in, and remember we cannot borrow, we have to be managing prudently and the PPP is one way of getting government to stay along a narrow track and not invest in these things that would cause us either to slip back (in a fiscal problem) or not to meet the criteria that (have) set for us.
Gravel and Concrete is one of three state-owned bodies that the Washington-based International Monetary Fund (IMF) had urged the Keith Mitchell-led government to privatise in order to cut back on state subsidy to keep them afloat.