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Min. Hulse: ASR Concession Is NOT An Accommodation Agreement
posted (September 25, 2012)
The term accommodation agreement has become like a bad word in modern politics - and that's because of the secret accommodation agreement that the Musa Administration signed with the Ashcroft Alliance for Telemedia.

Well, the Barrow Administration is making no secret of the accommodation it has worked out with American Sugar Refineries, a US company that will become the majority shareholder in BSI.

But disclosing the agreement doesn't mean it's going down with a spoonful of sugar.

The details have been circulated in the parliamentary papers for tomorrow's Special House Sitting. It is described in the Sugar Industry And Cogeneration Development Incentives Act of 2012.

And what lavish incentives it does give - including an exemption from income and business tax retroactive to 2008, with partial exemptions continuing up to 2016.

It also exempts BSI and BELCOGEN from tax on dividends for 5 years and ten years on environmental tax as well as customs and excise duties.

It will be presented and debated in the House, but the Northern Caucus of the PUP has already issued howls of disapproval. Principally, they say that the bill will give an unfair advantage to BSI over Belizean cane farmers, allowing the company to produce sugar cane at much lower costs - because they have duty exemptions. This is because BSI has three thousand acres of cane under production and accounts for a modest percentage of the volume of cane deliveries to the factory.

So the northern caucus is demanding that the tabling of the Bill be postponed until consultations are held and that the same exemptions are also granted to cane farmers.

We assume those demands are mostly rhetorical since the bill will be tabled tomorrow, and the agreement has been under negotiation for months - and government is not about to let a major investor like ASR slip away - particularly when the company is basically bailing out a deeply indebted industry which is urgently in need of rescue.

Moreover, the government's position is that there is no accommodation agreement - this, they say is just an extension of the original agreement government gave to BELCOGEN in 2005.

Minister Godwin Hulse who has been a part of the negotiation with ASR told us via telephone this evening that he knows nothing about an accommodation agreement:...

Hon. Godwin Hulse, Minister of Labour/Local Gov't/Rura; Dev./NEMO
"First of all there is no accommodation agreement Jules, that is crazy. The only time I heard of an accommodation agreement was something to do with BTL which was done secretly. This is a bill that is going to the National Assembly tomorrow to provide for certain concession to a significant investor in the sugar industry."

"There is an existing BSI/BELCOGEN bill of 2005 actually which has some significant remaining outstanding concession. That bill became law on the first of December 2005 and that was put forward by the People's United Party government at the time. In that bill there were concessions to BSI and BELCOGEN for business tax for a period of 7 years and that was from 2008-2012. There are still 2 years outstanding namely 2013 and 2014 on which 2013 BSI and BELCOGEN will be exempt from 66% from income and business tax and 2014 from 33% and in 2015 they will pay the full thing."

"What we have done is that we have extended that period 2 more years. Instead of in 2013 they will pay 33% - in 2013 now they will only pay 20% and instead of in 2014 they will pay 66% - in 2014 they will only pay 40%. Under the existing because it's still existing act in 2015 they would be required to pay the full business tax. Under the new act in 2017 they will be required to pay the full tax. They have gotten a concession of 2 more years only."

"Under dividends - under the old act they had 15 years. There is still 10 years remaining under that. We have cut it to 5 years. They would have ran out in 2022, we are running out now in 2018. Under interest payments they have 10 years remaining under the existing act. They would have run out in 2022, we kept that and we are running out in 2022. Under technical services they had 15 years - running out in 2022 - 10 years remaining. We are now running out in 2018. Only 5 years we've allowed. Import duties and environmental tax - they had 10 years running out in 2022 - we are keeping the same years running out in 2022. Stamp duties - they had 15 years 2007-2022, they have 10 years remaining. We are giving 50% and the exportation of sugar - that has always happen and will continue to happen under the condition as you see in the bill that they keep the local market supplied."

"I have no idea who is dreaming up things and thinking about accommodation agreement and all the rest of nonsense. It's really in a way a flock of equity for debt. The company has 64 plus million dollars in debt. That's what ASR has taken up and have adjusted the shareholding accordingly. That is all that's happening."

Jules Vasquez
"The contention that with these exemptions BELCOGEN/BSI/ASR will be able to produce came cheaper because of the ease of import duties and taxes they will be receiving."

Hon. Godwin Hulse
"How on earth is this going to disenfranchise the farmer?"

Jules Vasquez
"Will it create an unleveled playing field in the industry?"

Hon. Godwin Hulse
"Why will it create an unleveled playing field?"

Jules Vasquez
"Because if I have to pay import duties on my fertilizer, let's say and you don't well then you have an unfair advantage over me."

Hon. Godwin Hulse
"Remember BSI is a processing company - they are buying cane to process. How on earth are they going to have any advantage over the cane farmer? They will buy all the cane farmers cane as well."

Jules Vasquez
"Because they have thousands of acres of cane under production."

Hon. Godwin Hulse
"They do?"

Jules Vasquez
"They have cane fields."

Hon. Godwin Hulse
"Let's go back to basic principles - the cane farmers have benefitted from fuel duty free. The cane farmers have benefitted from all those inputs. Do you see anything in this bill that gives BSI any of that? BSI is entitled to exactly what they were entitled to. They have always been entitled to this - this is what we are saying. There is nothing new in the bill that is not in the 2005 bill, nothing new. What is new in the bill? Except that their income and business tax is extended 2 years."

"What the cane farmers need to do is grow more cane and sell more cane to the factory and get on with it. The final thing I have to say about this is give me another alternative. We have look at Banco Atlantida - in fact you yourself have interviewed me when we look there because there were bomb threats and all kinds of things. Banco Atlantida is a bank looking for some investment. They would have probably dropped us like hot potato down the road. ASR the only thing they do and have done is sugar. They are sugar people thru and thru."

The matter will be further ventilated at tomorrow's house meeting and we'll have full coverage of that.

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