The Special Purpose Unit (SPU) of the National Industrial and Commercial Investments Limited (NICIL) has announced that almost $2 billion has been disbursed to the Guyana Sugar Corporation (GuySuCo) for operational expenses of its three estates (Albion, Blairmont and Uitvlugt).
The SPU has said the release of these funds is in keeping with the plans of the coalition Government to make the industry viable and to safeguard the future of the more than 11,000 workers.
The SPU’s statement comes after GuySuCo’s Chief Executive Officer, Dr Harold Davis, Jr, told sections of the media that GuySuCo is slated to receive proceeds from the initial $17 billion the SPU has secured from the $30 billion bond facility.
Davis claims that GuySuCo had requested a substantial amount to advance its strategic plans, but monies received so far have catered only for wages and fuel expenses; and no other monies have been received.
The SPU said on Sunday that the monies from the bond facility will be used to purchase equipment for production of plantation white sugar, including the purchase of nine tractors, and to address the co-generation plants’ operational expenses.
“The monies obtained from the bond facility were not obtained to facilitate the payment of debt, as was ventilated time and again by the Minister of Finance and stakeholders,” the SPU has said.
GuySuCo is yet to complete its procurement process for the mentioned capital items. Therefore, SPU has said, GuySuCo is not in a position to draw down on additional secured funds.
Earlier this year, the NICIL was mandated to seek financing for the downsized Corporation, targeting retooling, diversification and improved agriculture. This was being pursued even as work was being done to privatise and divest the four estates — Skeldon, Rose Hall, Enmore and Wales.
Through local financing arranged by the Republic Bank Limited, NICIL has managed to successfully negotiate a bond facility for $30 billion, with significant input from the Finance Ministry.
The NICIL has requested $17 billion in the first tranche. “We will receive the remainder on request. It was structured in this manner for it not to incur unnecessary costs,” the statement added.
GuySuCo must submit its applications for financing to the SPU, and those are to be vetted to make sure they meet the approved criteria of the bond holders before financing is disbursed. Two disbursements have thus far been made, one for $880 million and another for $1.1 billion.
The SPU has said it must be noted that half of the bond amount would be provided for in local currency, while the remainder would be disbursed in United States dollars (USD).
With support from the Government by means of a sovereign guarantee, SPU Head, Colvin Heath-London, has been able to secure this funding spoken about. The benefit is a 4.75 per cent rate of return, which represents a tax-free bond.
NICIL, through its SPU, took control of the Skeldon, Rose Hall, Enmore and Wales estates when Government decided to close operations earlier this year in order to maintain the viability of the sugar industry.
Guyana’s Opposition Leader, People’s Progressive Party (PPP) General Secretary Dr Bharrat Jagdeo, has raised several concerns over the issuance of the multi-billion-dollar bond.
An economist by training, Jagdeo has said the general perception was that Government was raising $30 billion to spend on GuySuCo, on the remaining three estates. However, the memo tells a different story, as it has stated explicitly that the $30 billion agreed to would instead go to long-term projects.
Jagdeo has also said that when spending of the $30 billion bond begins, it will substantially increase the demand for foreign currency and put pressure on the country’s reserves. He has said that from all indications, there has been an unbelievable shortage of currency at the Central Bank, and utilising this bond will contribute to this shortage.
Since announcement of the bond, concerns have been raised about Government’s vision for the industry and the genuineness of its actions thus far, since that very $30 billion could have gone into restructuring the industry while keeping all of the estates open and GuySuCo’s workforce employed and engaged.
Some 5700 workers from Skeldon, East Demerara (Enmore) and Rose Hall Estates were dismissed after GuySuCo had terminated their employment in 2017. Before then, over 1000 Wales Estate workers were similarly dismissed when the entity officially ceased operation in December 2016. These moves were in keeping with what Government has said were “cost-cutting measures”.