Govt yet to calculate value of concessions to Sandals – Camillo

The main government investment in the Sandals Resort at Buccament is the improvement of the road leading to the resort but the tourism plant will receive “concessions and privileges typical of a project of this size and importance”.

Minister of Finance Camillo Gonsalves told Parliament on Thursday that the road improvement will cost EC$1.69 million, of which$493,000 is allocated in the 2024 budget and is funded by a grant from Taiwan.

The description of the project in the 2024 Estimates of Revenue and Expenditure is “to upgrade the earthen road to a concrete carriageway and complete drainage in the vicinity of the resort’s property,” he told lawmakers.

He was responding to a question by opposition lawmaker, Central Kingstown MP, St. Clair Leacock.

Leacock said he was “not privy” to the agreement between the government and Sandals, “if indeed there is one” and asked the minister to say the amount of government investment in the project and to detail the areas.

He also asked Gonsalves to say whether the government has any equity in Sandals’ investment in the country.

The finance minister told Parliament that the road improvement involves the construction of a concrete road and bridge from the main road along Duncan’s Furniture in Pembroke to the entrance of the resort.

“That road and bridge is estimated to be completed by the end of this month, February,” he said.

“Beyond this modest capital outlay, the remaining financial investment, broadly defined, comes in the form of concessions and privileges typical of a project of this size and importance.”

Gonsalves said these concessions include tax exemptions during the construction phase and a tax holiday during the operation phase, which does not exempt VAT “or particular excise duties”.

Sandals Beaches Resort at Buccament Bay will also receive concessions on the importation of food and beverages, and permission to operate a duty-free shop on the resort “among others”, the minister said, without detailing the others.

“Sandals may benefit from an extended period of reduced taxes if they construct an additional 103 rooms at the resorts within a specified period of time. That’s in addition to the 302 that it will open with,” Gonsalves said.

“These concessions are in line with existing laws governing investments in St. Vincent and the Grenadines as listed under the Investment Act and the Hotels Aid Act.”

‘government has invested considerable sweat equity’

He said the government does not hold a financial equity stake in Sandals Resort.

“However, the government has invested considerable sweat equity in attracting the resort, resolving the complex pre-existing legal issues surrounding land ownership in Buccament, compensating farmers in the area and negotiating ongoing benefits for the neighbourhood village of Buccament.”

Gonsalves said Leacock was correct when he described the project as important.

He said the resort has generated foreign direct investment in excess of US$200 million, employed over 700 locals and proven instrumental in attracting new and additional airlift into the Argyle International Airport.

“On its scheduled March 27, 2024 opening day, the Sandals Resort will employ 575 locals, a number that is anticipated to increase to 900 locals within one year of opening day,” Gonsalves said.

“At over 300 rooms, Sandals Resorts will be the largest single hotel operating in St. Vincent and the Grenadines in financial terms.”

The finance minister recounted the government’s efforts to attract Sandals to the country, including the steps it had to take to settle title and other matters after the failure of the Buccament Bay Resort, which was located at the site.

“Despite the noise of the naysayers, we consummated our deal with Sandals in July of 2020,” Gonsalves said.

Beach access guaranteed

He said the deal committed Sandals to maintain the public access to the beach in front of the resort via a bridge over the Buccament River from Buccament Village.

The resort also committed to rehabilitate and maintain the beach on the village side of the Buccament River, including through the construction of beachfront shops in Buccament Village to facilitate local entrepreneurship and develop hospitality services.

“Those shops have subsequently been completed, but I don’t believe they’ve yet been handed out to local entrepreneurs,” he said.

The deal also commits Sandals to provide Vincentians employed at the Sandals Resort with opportunities to pursue advanced training and degrees and certifications through instruction at the Sandals Corporate University.

Sandals also agreed to procure locally-produced agricultural goods and seafood from Vincentian farmers, fisherfolk and businesses “subject to availability, and the quality required for a five-star, all-inclusive luxury resort”.

Further, the agreement is that through the Sandals Foundation, the resort will engage in philanthropic activities, and corporate social partnerships within St. Vincent and the Grenadines in areas of community development education and environmental awareness.”

Value of sweat equity?

Leacock, however, asked Gonsalves whether the government has been able to quantify “the sweat equity that has been put into the worthwhile investment as well as the concessions that have been granted to, again, the worthwhile investment as well as the sum total of financial costs to take care of the several inhibiting factors that would have prevented the conclusions that we are realising today”.

He said there must have been “financial costs along the chain to where we are today and future projections.

“Are we in a position to quantify those amounts of the government’s effort into this worthwhile exercise?” Leacock said.

However, the finance minister told Parliament he did not have that data at the moment.

“And I don’t know if we have fully compiled that data,” Gonsalves said, adding that there are two phases.

“There were a series of concessions given for the construction phase of the resort and then there are concessions related to the operational phase of the resort,” he said.

Gonsalves said the importation of certain construction equipment, materials and other items have a concessional element during the construction phase that expires at the end of construction and then there is the operational phase.

“Now we have not yet concluded the construction phase and I do not have a running tally of what that type of concession arrangement would be,” he told Parliament.

“Similarly, in the operational phase, quantifying that commitment will rely in large part on how much we provide locally.

“For example, the contract that we have with Sandals indicates that they must use best efforts to procure local agricultural products, local fish, so I’m assuming there is sufficient quantity and quality reliably provided for a resort of that size.

“If we cannot provide it, they will import it and that importation will have a food and beverage concession element which we will not be able to quantify until the operations of the resort actually begin.

“So, I don’t have that data at the moment. I think that’s an appropriate question that can be asked further down the road,” Gonsalves said.