GUYANA ECONOMIC & COMMERCIAL ROUND-UP

UNCLAS SECTION 01 OF 02 GEORGETOWN 000760

SIPDIS

SANTO DOMINGO FOR FCS
SIPDIS

E.O. 12958: N/A
TAGS: EFIN EMIN EAID EAIR ECIN ENRG ECON GY
SUBJECT: GUYANA ECONOMIC & COMMERCIAL ROUND-UP
JUNE-JULY 2006


Contents of June-July 2006 Guyana Economic/Commercial Highlights:


1. Mining: Cambior prepared to sell bauxite stake

2. ESTH: Environmental permit sought for Berbice River bauxite
project

3. Banking: Republic Bank Rebrands, Introduces Debit Cards

4. Debt: World Bank grants US$322M debt relief

5. Public Finance: Revenue Authority reports 2005 tax exemptions

6. Oil: Sadhna to start onshore exploration in September

7. Civil aviation: TSA conducts aviation security workshop

8. Energy: MOU for US$300M hydropower station at Amalia Falls

9. Aid: Japan provides $US5.6 million for water project in
Corriverton

10. Inflation Watch: Consumer Price Index - June 2006

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Mining: Cambior prepared to sell bauxite stake
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1. Canadian mining company Cambior announced on June 16 that it is
prepared to sell all or part of its 70% stake in Omai Bauxite Mining
Inc. (OBMI) and is on the lookout for new investors with a view to
having a transaction completed by year-end 2006. The company cites
increasing competition from Chinese bauxite products as well as its
intention to focus on its core gold business. Cambior's Omai Gold
Mines Limited is contemplating restarting operation after ceasing
mining last year when reserves ran out after twelve years of
operation.

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ESTH: Environmental permit sought for Berbice River bauxite project

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2. The Bauxite Company of Guyana Inc (BCGI),a subsidiary of the
RUSAL Group of Russia, has applied for an environmental
authorization to extract bauxite from approximately 3,400 acres of
land on the East Bank of the Berbice River. The company is investing
US$18.6 million in the project, which is expected to produce US$
60.8 million worth of bauxite annually. The company expects to
produce three million metric tons yearly at the rate of 10,000 tons
per day over the twenty-year life of the project. RUSAL officially
took over the operations of the formerly GOG-owned Aroaima Mining
Company on April 1.

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Banking: Republic Bank Rebrands, Introduces Debit Cards
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3. The National Bank for Industry and Commerce officially rebranded
itself Republic Bank (Guyana) Limited on June 5, in keeping with its
parent company in Trinidad and Tobago and sister companies in
Grenada and Dominican Republic. On June 26 the bank launched its
pre-paid Visa Travel Money (VTM) card that will allow users to
access money from ATMs and make purchases wherever Visa is accepted
worldwide. The VTM cards cannot be used for internet purchases, to
make pre-bookings for hotels and car rentals or over the phone.

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Debt: Guyana receives US$322M debt relief from World Bank
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4. Effective July 1, the World Bank cancelled US$322M in debt to the
International Development Association (IDA) under the Multilateral
Debt Relief Initiative (MDRI),which is the total amount of
additional IDA debt relief provided under the MDRI and the IDA
portion of debt relief already committed under the Heavily Indebted
Poor Countries Initiative (HIPC). Guyana will receive estimated MDRI
relief in the amount of US$189M, which is in addition to the US$133M
in IDA debt relief committed under the HIPC Initiative.

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Public Finance: Revenue Authority granted $876M in exemptions for
2005
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5. The Guyana Revenue Authority (GRA) announced on June 30 that it
granted a total of G$876.1 million (US$4.36 million) in individual
exemptions of duty, consumption tax and purchase tax, with
re-migrants receiving G$352.4 million (US$1.75 million) in
exemptions and public and contracted officers being afforded
G$523.78 million (US$2.61 million) for calendar year 2005. Among
public officers, 17 Members of Parliament had the most exemptions
with a total of $141 million (US$700,000) in write-offs. The GRA
also granted duty and consumption tax exemptions to corporate
entities amounting to G$4 billion (US$20 million) on articles whose
value was G$11.8 billion (US$58 million) in a number of sectors for
the year 2005.

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Oil: Sadhna to start onshore exploration in September
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6. Commissioner of the Guyana Geology and Mines Commission (GGMC),
Robeson Benn, said on July 23 that Trinidad-based Sadhna Petroleum
Services Company Ltd, one of the two oil companies to sign
agreements with the GOG in the last year, is to commence operations
on the ground in September 2006. Sadhna will be exploring for oil on
the Corentyne Coast with a license valid for four years. According
to the agreement, the GOG will reportedly receive 50% of profits in
the event of a commercial discovery that leads to production.
Canadian firm Groundstar Resources Ltd has also obtained a license
to prospect for oil in Guyana's interior.

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Civil Aviation: TSA Conducts Security Workshop
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7. The GOG, in association with the Inter-American Committee against
Terrorism of the Organization of American States, concluded a
five-day workshop on civil aviation security in Georgetown on July

21. Two U.S. Transportation Security Administration (TSA)
instructors led the course, which focused on standards and
recommended practices by the International Civil Aviation
Organization (ICAO). The workshop also reviewed Guyana's national
security program.

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Energy: MOU for US$300M hydropower station at Amaila Falls
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8. Minnesota-based Synergy Holdings Inc has signed an agreement for
the construction of a hydropower station worth US$300 million and
will also make available to Guyana Power and Light (GPL) a four unit
Wartsila plant that will supply 25 megawatts of power by February

2007. According to the two Memoranda of Understanding which were
signed in May 2006, the Wartsila plant is an interim arrangement as
Synergy moves to establish a 100 megawatt hydropower station at
Amaila Falls, to supply hydropower to the national grid. The
hydropower plant will break ground in August 2007. Synergy President
Makershwar Flip Motilall said that 70% to 75% of the US$300M
financing for the Amalia Falls hydropower plant will come from
multilateral banks and the remainder from equity financing through
the private sector. According to Motilall the firm does not intend
to seek a local source of financing. The project is expected to
begin commercial operation by late 2010.

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Aid: Notes signed for $US5.6M water project in Corriverton
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9. Clement Rohee, GOG Minister of Foreign Trade and International
Cooperation, and the Charg d'Affaires in the Embassy of Japan in
Trinidad and Tobago signed and exchanged notes on July 24, for
construction of a US$5.6 million water project in Corriverton,
Berbice (eastern Guyana). The project will be done in two phases to
be completed over three year period and is expected to serve some
30,000-40,000 people. The Corriverton Potable Water Project was
submitted by the Government of Guyana for funding under the Japan's
Grant Aid Program. The project includes construction of two water
treatment plants as well as the introduction of modernized
filtration technology for the first time in Guyana.

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Inflation Watch: Consumer Price Index - June 2006
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10. The Bureau of Statistics reported that inflation for the first
half of 2006 (December 2005 to June 2006) was 3.4%, including a 0.9%
increase in the consumer items monitored in the Urban Georgetown
Consumer Price Index (CPI) basket of goods and services. The price
index value accordingly moved from 215.5 in May 2006 to 217.6 in
June 2006. Year on year inflation (June 2005 to June 2006) was
8.3%.

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