Is the GFC usurping the President's authority on sub-letting forest
concessions?
Kaieteur News, 18 July 2007
Dear Editor,
The statement on forest concession sub-letting, issued by the Guyana
Forestry Commission (GFC) and published in the Kaieteur News
(2007-07-13), seems to confuse what should be a simple matter.
Operators of forest concessions who cannot work them should have them
rescinded and returned to a strategic pool for re-bidding by eligible,
qualified, financed and capable operators, according to the 1993 policy
and GFC's own procedures (including Section 11 in the Forests
(Miscellaneous Provisions) Act of 1982).
The National Development Strategy 2001-2010 requires allocation of
forest areas for harvesting to be through a competitive, fair and
transparent manner.
These Barama deals recently revealed to the public are not competitive
or transparent. And the Commissioner of Forests did indicate, in
Kaieteur News (2006-12-11) under the caption “Forestry Commission to
repossess unutilised concessions,” that the GFC would indeed take back
such licences.
At least one letter in Kaieteur News (by Patrick Jackson on 2006-12-13,
captioned “Re-possessing forest harvesting concessions – why delay?”)
asked why this process was being delayed when policy and law were
clear.
Conditions in the concession agreements (Timber Sales Agreements and
Wood Cutting Leases) prohibit sub-letting except with the prior written
permission of the President. Although the Commissioner uses vague
wording in his recent statement, his claim that sub-contracting is
allowed is not sustained by Condition 13 where, “The grantee shall not
transfer, sublet, mortgage or otherwise dispose of any interest arising
under this agreement except in accordance with the Forest Regulations
and any purported disposition made except in accordance with such
regulations shall be null and void”.
It is clear that sub-contracting could not be covered by this
condition. Sub-contracting is not equivalent to “sprinting”
(sub-contracted labour only) which is the intention in Condition 14 of
the TSA agreement.
The Commissioner claims that he can authorise sub-letting, but the
Forest Regulations say that this is the job of the President, as
Minister of Forestry.
The 1993 policy also does not allow TSA holders to acquire extra forest
unless they have demonstrated that they can work a concession at
maximum sustainable yield. Barama has repeatedly stated, and the GFC
has confirmed, that Barama is extracting well below that level
(although other information suggests that Barama is wasting and
damaging far more timber than it is harvesting; another good reason to
refuse to allow it to rent more acreage).
The GFC statement says that “this sub-contracting was also intended to
improve the ability of the contracting company eventually to a point
where it no longer had to engage in sub-contracting”. But if the
contracted Asian-owned logger is taking the effective forest management
decisions and using his/her own equipment and labour, how is the
improvement going to happen?
It is not in accordance with any policy to allow an incompetent or
under-financed operator to hold onto a forest concession and then rent
it out to another operator. That is such a contradiction to the
supposedly fair and transparent GFC process for acquiring concessions
in the first place.
And in what ways is the Asian-owned logger a model for a Guyanese
company? Taking the main culprit as an example, the Barama Company
Limited (source information in brackets) –
º% is in violation of the GFC concession policy of 1993 by not having a
current management plan (ASI and SGS Qualifor), and so should not be
holding a TSA;
º% operated its plywood mill at 25 per cent capacity and its sawmills
at 6-7 per cent capacity in financial year 2005-6 (Samling's IPO
prospectus) yet exported 80 per cent of all logs shipped from Guyana in
that year;
º% promised in 1999 to invest a further US$ 32 million but has failed
to complete that investment, thus incurring public censure from the
Minister for Forestry on December 8, 2006;
º% claims to have been unprofitable during its entire residence in
Guyana since 1991, and so not subject to income tax (Barama's own
statements and IPO prospectus), and thus hardly a good business model
for the under-capitalised local enterprises;
º% through its foreign direct investment agreement, took 87 per cent of
all Guyana Government fiscal incentives for the forestry sector in 2005
(Guyana Revenue Authority);
º% has questionable accounting practices (Christopher Ram in SN
Business News);
º% has poor employment and labour practices (CARICAD);
º% sends its Malaysian and Indonesian loggers for training at Guyana's
Forestry Training Centre but will not train Guyanese staff there
(Samling's IPO prospectus).
Through the Editor, I call on the President to exert his legal
authority as Minister of Forestry and not allow his powers to be
usurped by the Commissioner of Forests.
Mahadeo Kowlessar
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