Cliff Williams, Contributor

Speaking about the imminent sale of the 80 per cent shareholdings of the operators of the country's sole light and power entity, the Jamaica Public Service Company, Minister of Finance, Dr. Omar Davies, expressed surprise that all the offers have come from foreign companies.

In fact, there was some measure of disappointment in his tone that none of the local reputedly cash-rich group of companies showed any interest whatsoever in the acquisition of a business delivering this service. This is the reality even in a perpetually monopolistic environment with profits virtually guaranteed.

I suspect that the prohibitive capital cost of the modernisation of the company's technologically ancient machi-nery is the major factor rendering the offer unattractive to local entrepreneurs.

Overseas-based investors

Obviously, the richer over-seas-based investors can in all probability afford to wait longer after their initial capital outlay for the returns to click in.

A parallel of sorts can be drawn with the rejection by the Government of the bid to operate the Caymanas horse-racing business. The offer by the selected preferred potential investor apparently fell short because of the huge estimated capital outlay required to deliver the product in a modern, or at worst, a significantly upgraded facility. At least this is what I prefer to believe rather than the stories about political machinations informing the decision to reject the bid.

Although the promotion of live racing has enjoyed monopolistic status over the last four decades or so, four different companies, two private-sector operated and two government-owned, have had difficulty sustaining profita-bility. There have been periods, however, when these promoting companies have enjoyed significant growth in sales turnover.

Serious competition

Over the last 10 years the current promoting company has had to deal with serious competition from a proli-feration of lotteries and numbers games, as well as unlicensed operators pirating its intellectual property.

Then there is the matter of the hefty deduction of about 30 per cent from the betting dollar which has stymied the growth of sales, thus discouraging the local punter from wagering more.

In terms of an investment, given all the positive and negative variables, and against the background of what options are available globally, it would seem to me that private acquisition of the promotion of Caymanas racing is not likely to produce returns commen-surate with the massive capital outlay and the risks involved.

It may very well be that this type of investment is likely to be better served by a broad-based ownership structure and a public offer of shares.