Neotown : “Mega scandal” or “Mari Deal”?

By K. Murali 

Depending on which side of the fence he finds himself, “Mega scandal” or “Mari Deal” are terms usually used by Mr Bérenger to qualify major projects. Neotown, attributed to the Mumbai group Patel Engineering, is projected as an integrated township within the heart of the City. The project, estimated at one billion dollars, is unique in the history of Mauritius and calls for a totally new vision of the approach to infrastructure development. The onus for financing, planning, construction and management will be the responsibility of one single group. The classical methodology of different entities assuming responsibilities for different aspects of projects has been revisited. The present approach has the advantage of everything being done under a single umbrella thereby resulting in a synergy leading to more efficient use of resources, time and of course money.

On his present side of the fence, the Leader of the Opposition views Neotown as a “Mega Scandal”. His main objections are

(i)          no tenders or request for proposals were formally called for;

(ii)         the lease agreement is for a period of 99 years. He uses the usual timeframe of industrial building as yardstick and finds the period excessively long;

(iii)        the government is going to foot the bill for offsite infrastructure works;

(iv)       the amount of money to be paid by Patel Engineering in the initial period of the lease is negligible; and

(v)        Patel Engineering does not have the necessary experience in handling such projects.

The above, according to Mr Bérenger constitutes a “Mega Scandal”, with no parallel in the history of this country. The innuendoes of the MMM, fuelled by the remote-controlled grapevine rumours, purported to convey the perception that the Patel Engineering Group has benefited undue favours from the Ramgoolam-led government. The objective was to place the Prime Minister at the centre of the so-called “Mega Scandal”.

To understand the posture of Mr Bérenger, it is appropriate to prendre du recul and analyse how he would have reacted when confronted with a dossier of the like of Neotown. In this context, we need to revisit his handling of the IBL project at Agalega.

The PNQ of the 23rd March 2004 from Dr Navin Ramgoolam, then Leader of the Opposition, sheds light on this matter. The answers from Mr Bérenger, then Prime Minister, are enlightening. It is necessary to quote:

“… As far as the IBL Project is concerned, Mr Speaker, it was submitted in June 2001 through the OIDC. The project concerns the construction of some 15 chalets with all amenities, including a fishing centre, a boat house and a game room. The hotel would employ some 40 persons, 60% of whom would be Agaleans, residents of Agalega. Besides, the hotel complex would also include a desalination plant and a sewerage treatment plant. 

…On 19 December 2003, Government, that is, Cabinet, agreed to issue a conditional Letter of Intent in favour of Ireland Blyth Ltd. (IBL) or any of its fully owned subsidiary for the lease of 25 arpents of State land for the development of the Agalega Island Resort Project and 87 arpents of land for landscaping purposes only. As stated above the 87 arpents would remain open to the public and would also allow OIDC to continue the exploitation of the coconut plantation found thereon.

… IBL has indicated that the whole project is subject to two sine qua non conditions –

 (a) access being made available through the enlargement of existing passes on both sides of the Island so as to allow fishing boats to operate whatever the climatic conditions, and 

(b) It would have to purchase a small plane. The operation thereof would not be sustainable if the plane did not operate to Rodrigues, Reunion Island, Madagascar, Comoro Islands and other countries in our sub region.

The Prime Minister: As far as air transport is concerned, Mr Speaker, it is much more complex as regular flights to destination other than Rodrigues seem out of question and would entail the re-negotiation of bilateral air services agreements between Mauritius and these countries and Air Mauritius and other airlines. Non regular flights to those destinations are being considered.

Dr Ramgoolam: Why is it that Government did not consider public auction in that case since we are talking about an island quite far from Mauritius? Why did it not consider that instead of giving a lease to IBL?

The Prime Minister: Mr Speaker, let’s be fair! Agalega has been there for centuries. It is open to any visitor. We were casse nou la tête to find what projects can go on there. Those who have been there know that it is a depressed mood. We are breathing fresh air into that, including the setting up of an Agalega Island Council for the local residents to be heard, to have a voice. The IBL people are very enterprising. We have said, for example, that we want to make of Mauritius a sea-food hub. The first company to come forward with a huge project which is going to go up within weeks is IBL. It is a good thing that you have certain groups that are dynamic, that come with projects. They are a bit specialised in fishing enterprises – not fishy enterprises which I leave to others like the hon. Member. They went there at their own costs. They worked out a project and came forward. If there are others or if the Leader of the Opposition wants to come forward with a project, it will be considered.

Mr Duval: Can I ask the Prime Minister whether IBL operates currently any hotel in Mauritius as a basis for applying for the operation of a hotel in Agalega?

The Prime Minister: I do not think IBL operates hotels itself. It is a shareholder in companies that operate hotels. Should the project go ahead, I have no doubt that IBL would turn for management purposes to the best management professionals available.

Mr Duval: Can I ask whether the Prime Minister is aware that IBL had two small hotels in Mauritius, but they were not successful and that they were sold off to some other persons during the last year or so? Therefore, with that in mind, what guarantee does he give to the population that the costs involved in setting up a new hotel to the public purse will be fully justified by the operation of a good hotel there?

The Prime Minister: It is their money. They come with their money. They fulfilled all the conditions that are put. I repeat, Mr Speaker, Sir, that the more we meet with problems and the more IBL feels like dropping the project. I would be very déçu and so would be Government and the local residents if, finally, that is the case. It is our intention to do our best for this project to go ahead with all required conditions fulfilled.

Mr Dulloo: Mr Speaker, Sir, we have just heard that the Letter of Intent was issued on the eve of the by-election, that is, on 18 December. The hon. Prime Minister has invited us to come forward if we have other projects. May I ask him whether IBL has been given exclusive status? Apart from the various fiscal incentives and duty-free even for the airplane, can he say whether they have been given exclusive status, that no tourist activities will be allowed by any other operators on the island by virtue of the Letter of Intent and the agreement to be signed with IBL?

The Prime Minister: Mr Speaker, I am tabling the Letter of Intent.

Dr Boolell: Can I ask the Prime Minister whether IBL will have exclusive fishing rights in that area?

The Prime Minister: Fishing rights, no. But to start a project like that with the investment required in planes and so on, they had asked for exclusivity for the hotel project over a limited period of time. But I shall table both the Letter of Intent and the representations made by IBL. But not fishing rights!

Dr Boolell: Can the Prime Minister give the guarantee to the House that IBL would not have fishing rights and whether there will be an assessment of the fishing stock and whether others could apply to have rights for fishing in that area?

The Prime Minister: It is not really fishing rights. Their point – I am quoting from memory – was for them to invest in a risky venture. They would need a number of years to recoup their expenditure. If they are the only ones to be around operating a hotel complex and a fishing complex it is not a question of them having exclusive rights, but, of course, they would be the only ones to be in a position to offer fishing facilities to tourists.

Dr Boolell: Mr Speaker, Sir, at a time when we are talking about democratisation of the economy, what the Government is doing is that it is giving lock, stock and barrel to one particular company – exclusive hotel rights, exclusive fishing rights. This is what is happening, Mr Speaker, Sir! This is the policy of this Government. I should like to know what is being done by this Government to democratise the economy. They have started with Mauritius, now Agalega, then Rodrigues and all over the place!

Mr Dulloo: The Prime Minister has not answered the second part of question (c), that is, whether now the investment being contemplated would be over Rs 1 billion for the airstrip, the new harbour, electricity, telephone, water, and these investments would be required to be made by Government, in order to make the IBL project viable and profitable. 

Dr Ramgoolam: The point that we are trying to make is that it seems that preferential treatment is being given to IBL. I will say why and I will ask the Prime Minister to respond to that. First of all, nobody was aware that there was a possibility of a project there and, then, suddenly, IBL comes up with the project. Did not the Prime Minister chair the first committee which looked at the project for IBL?

The Prime Minister: There is absolutely no preferential treatment being meted out to anybody. Mr Speaker, Sir, this is what entrepreneurship is about! Promoters from all quarters of the economy, including foreign promoters, are there to look for business opportunities. This is what entrepreneurship is all about! I must say that, if the people of IBL did not have a special interest for fishing activities and so on, they would certainly not have spent money. Already millions have been spent on consultancy, pre-feasibility and feasibility studies, etc. There is absolutely no preferential treatment to whoever, Mr Speaker, Sir, and I repeat that the danger, right now, is that IBL drops the project. We will be as helpful as we can, not at public expense, and all environmental and other conditions fulfilled.

Dr Ramgoolam: Again, IBL gets the cake and eats it at the same time! The Prime Minister says that no public money is going to be involved. But he confirms that an airstrip is going to be enlarged, so that IBL can put this airplane of 19 seats. That is what is going to happen. The port is going to be developed, the fishing station is going to be given, everything is going to be given to IBL. And the Prime Minister says there is no hidden agenda! There is a hidden agenda! IBL is being given the island, which occupies a geo-strategic position; and they are going to get an island! That is what the problem is.’”

It is therefore clear that from the very words of Mr Bérenger that

(i)          Agalega was leased to IBL on their mere demand. No tender or Request for proposals exercise was carried out;

(ii)         substantial infrastructure works like the construction of an airport was to be carried out by the government — at the taxpayers expense;

(iii)        windfall gains like exclusive fishing rights and the right to operate a private airline was included in the package;

(iv)       IBL did not have the experience of handling such projects, particularly in the field of hotel management; and

(v)        entrepreneurship is about looking out for business opportunities. Although this is a “Mari Deal” when applied to IBL, it is a “Mega Scandal” when Mumbai- based Patel Engineering is concerned.

It is now clear that Mr Bérenger is applying the dictum – fais ce que je te dis mais ne fais pas ce que je fais and his criticisms do not hold water. It is a matter of regret that in its denunciations of the Neotown project the MMM is playing cheap politics to score political mileage. But in so doing it is not only losing credibility but is also jeopardising the development of the country.

* Published in print edition on 20 May 2011

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