San­dra Chouthi

Hafeez Kara­math En­gi­neer­ing Ser­vices Ltd (HKESL) has been grant­ed a US$52 mil­lion loan by First Cit­i­zens bank for the re­main­ing 40 per cent shares of the De­sali­na­tion Com­pa­ny of T&T (De­sal­cott). The Pt Lisas-based com­pa­ny was formed in 1999 to sup­ply de­sali­nat­ed wa­ter to the Wa­ter and Sew­er­age Au­thor­i­ty (WASA).

De­sal­cott orig­i­nal­ly had the re­spon­si­bil­i­ty to de­sign, build, fi­nance and op­er­ate the US$200 mil­lion de­sali­na­tion plant. Yash­mid Kara­math, ex­ec­u­tive chair­man of De­sal­cott and broth­er of Hafeez, who died in 2009, made the an­nounce­ment at a din­ner func­tion at the Hy­att Re­gency, Port-of-Spain, on Fri­day night.

Kara­math said the orig­i­nal share­hold­ing in De­sal­cott com­prised 60 per cent owned by HKESL and 40 per cent owned by Ion­ics Ltd, a Unit­ed States-based de­sali­na­tion com­pa­ny. Gen­er­al Elec­tric lat­er ac­quired Ion­ics Inc.

Kara­math, who took the helm of the com­pa­ny on his broth­er's pass­ing, said ne­go­ti­at­ing the ac­qui­si­tion took two years. Asked af­ter the for­mal pro­ceed­ings why it took so long, Kara­math said it was very dif­fi­cult to get GE to sell its 40 per cent stake. He said it took GE six months to agree to sell, which it did in late 2010, and by March 2011, its de­ci­sion changed as the Amer­i­can com­pa­ny want­ed more mon­ey, which meant HKESL had to re­turn to its bankers.

"We en­tered in­to a le­gal bat­tle with them, to and fro, to and fro, the re­sult of which was they set­tled at a fair price based on an in­de­pen­dent val­u­a­tion," Kara­math said. He said the val­u­a­tion was done by a Unit­ed King­dom firm, but did not iden­ti­fy it, and that the ac­qui­si­tion cost a to­tal of US$52 mil­lion, 100 per cent of which was fund­ed by First Cit­i­zens bank.

Re­pub­lic Bank holds the orig­i­nal US$200 mil­lion loan. "In fi­nan­cial terms, it's called pari pas­su," Kara­math ex­plained. In­fi­nance, this term refers to two or more­loans,bonds, class­es of­share­shav­ing equal rights of pay­ment or lev­el of­se­nior­i­ty. Kara­math said De­sal­cott, which em­ploys 105 peo­ple, is a prof­itable com­pa­ny, which was the ba­sis of qual­i­fy­ing for the loan.

The com­pa­ny was de­signed 14 years ago to pro­duce 24 mil­lion gal­lons of wa­ter. Ex­pan­sion plans are in the works. "WASA just asked us to car­ry the plant up to 40 mil­lion gal­lons of wa­ter by 2013." Kara­math said of De­sal­cott's 32 mil­lion gal­lons of wa­ter pro­duced dai­ly, com­pa­nies at the Pt Lisas in­dus­tri­al es­tate use be­tween 19 and 21 mil­lion gal­lons, and the re­main­ing three mil­lion gal­lons are sup­plied to homes in cen­tral and south Trinidad.

Hafeez Kara­math's dream

Kara­math said De­sal­cott was the brain­child of his broth­er Hafeez, who "worked tire­less­ly to trans­form his vi­sion in­to a re­al­i­ty. "He brought in the rel­e­vant ex­per­tise in de­sali­na­tion in the form of Ion­ics Inc, sought lo­cal fi­nanc­ing through Re­pub­lic Bank Ltd and the Re­pub­lic Fi­nance and Mer­chant Bank, and con­struct­ed the plant at Pt Lisas.

Among those in­vit­ed to Fri­day's func­tion were Dr An­tho­ny N Sab­ga, chair­man emer­i­tus of the ANSA McAL Group, Em­manuel George, Min­is­ter of Pub­lic Util­i­ties, Nyree Al­fon­so and Lar­ry Nath, chair­man and CEO of First Cit­i­zens Group, re­spec­tive­ly.

"It was his dream that De­sal­cott would one day be 100 per cent lo­cal­ly owned and op­er­at­ed and that the plant's ca­pac­i­ty would be in­creased to pro­vide more de­sali­nat­ed wa­ter to the gen­er­al pub­lic of T&T," Kara­math said. Kara­math said his broth­er's pass­ing was a tremen­dous blow to him­self, his fam­i­ly and the HK Group. "His im­per­a­tive of sole own­er­ship and growth be­came my mis­sion to com­plete."

Kara­math said the ac­qui­si­tion of the shares from GE be­came ef­fec­tive No­vem­ber 6, 2012. On that day, too, De­sal­cott ex­e­cut­ed an amend­ed wa­ter-sale agree­ment to in­crease its pro­duc­tive ca­pac­i­ty from 24 mil­lion gal­lons a day to 40 mil­lion by De­cem­ber 2013. "De­sal­cott is cur­rent­ly ranked with­in the top ten most suc­cess­ful plants in the world. It is my vi­sion that with­in the near fu­ture, De­sal­cott would be the largest de­sali­na­tion plant in the world," Kara­math said.

Back­ground to De­sal­cott

De­sal­cott's ear­ly be­gin­nings were mired in con­tro­ver­sy. Un­der the tenure of Gan­ga Singh as Pub­lic Util­i­ties Min­is­ter, in 1998, the An­ti-Cor­rup­tion Bu­reau ar­rest­ed bid­der Hafeez Kara­math for what was termed ma­nip­u­la­tion of the bid eval­u­a­tion com­mit­tee over­see­ing the US$120 mil­lion deal. Singh, who was ap­point­ed Min­is­ter of the En­vi­ron­ment and Wa­ter Re­sources in June, was not at Fri­day night's func­tion.

In re­sponse to ques­tions over De­sal­cott short­ly af­ter his ap­point­ment five months ago, though, Singh said, "Well, that mat­ter was dealt with. It was in­ves­ti­gat­ed and there was no pub­lic of­fi­cial im­pli­cat­ed in any sense, so I don't know that...To my mind, that is a dead is­sue." Asked if he felt he was to­tal­ly vin­di­cat­ed in the De­sal­cott scan­dal, Singh replied: "Yes, vin­di­cat­ed."