Nearly $2B from a $30B bond facility has been released to the cash-strapped Guyana Sugar Corporation (GuySuCo) for its operational expenses.
This was disclosed yesterday in a statement by government’s holding company, the National Industrial and Commercial Investments Limited (NICIL) and its Special Purpose Unit (SPU).
The statement was in response to a news item that appeared in yesterday’s Sunday Stabroek reporting new GuySuCo Chief Executive Officer, Harold Davis Jr as stating that
GuySuCo has not yet received any funds from the $17 billion that was secured by the SPU since May to revamp its operations and as a result it could not begin the implementation of any of its modernisation.
Yesterday’s statement from NICIL/SPU also disclosed that the full $30B bond facility has been raised.
The statement said that the $2B released is for operational expenses for the three retained GuySuCo estates: Albion, Blairmont and Uitvlugt in keeping with the plans of the APNU+AFC Government to make the industry viable and to safeguard the future of the 11,000-plus workers.
“As can be recalled, and reported, earlier this year the NICIL was mandated to seek financing for the smaller-sized Corporation targeting retooling, diversification and improved agriculture.
“This was being pursued even as work was being done to privatize and divest the four estates- Skeldon, Rose Hall, Enmore and Wales.
“Through local financing, arranged by Republic Bank Limited, the NICIL managed to successfully negotiate a Bond Facility for GYD $30B, with significant input from the Ministry of Finance.
“A full GYD $30B has been secured but the NICIL requested GYD $17B in the first tranche. We will receive the remainder on request. It was structured in this manner (so as) not to incur unnecessary costs. It must be noted that half of the bond amount would be provided for in local currency while the remainder would be disbursed in USD”, the statement said.
It added that the bond facility is the largest ever for the country and is clear evidence of the capacity of the local state agency and financial institutions.
Under the arrangements, the NICIL/SPU statement said that GuySuCo must submit applications that are vetted to make sure it meets the approved criteria of the bondholders. Two disbursements have been made so far- one for $880M and another for just over $1.1B.
The statement added that NICIL has taken note of the article appearing in yesterday’s Sunday Stabroek under the headline `Plans for revamping GuySuCo awaiting funding, new CEO says…-company still to receive proceeds from initial $17B secured from bond facility’.
The statement said that GuySuCo’s Chief Executive Officer, may have been misinformed on the disbursements.
The statement disclosed that the monies from the bond facility will be used to purchase equipment for plantation white sugar and co-generation plants and operational expenses, including the purchase of nine tractors. It emphasised that the monies obtained from the bond facility were not acquired to facilitate the payment of debt.
The NICIL/SPU statement said that GuySuCo is yet to complete its procurement process for the mentioned capital items and therefore it is not in a position to draw down on additional secured funds.
“The sugar industry is critical to Guyana. Indeed, GuySuCo received over $30B in cash transfers over the first two years of the Coalition Government to that end. It is the mandate of the NICIL/SPU to ensure that the sugar industry returns to profitability with the industry to reach the levels of sustainability”, the statement added.
Davis had told the Sunday Stabroek that although he was only recently appointed CEO, he is certain that the corporation has not seen any of the funds or resources purchased from it and he would know by now.
The former Agricultural Director of GuySuCo said that SPU or any other agency or person saying that the money has been collected means nothing to the corporation if it is not being used. “I am a scientist and I work with facts and energy. Say I have this paper and I keep it here, it remains there, it does nothing, it does not move, it is there. So if you hold something in front of me and say, ‘I have this,’ it means nothing to me. Unless there is the investment, it means nothing. So, I want to dissuade you of the view that we have collected,” Davis, the holder of a PhD in Soil Chemistry, said.
“I don’t even want you to give me the money but if I say ‘We need this’ or ‘I want you to buy this for GuySuCo,’ I want to see this. I am not really interested in the money I want the tools and the resources to do what I have to do,” he added.
Equipped with a strategic plan and the knowledge he has working with GuySuCo from 1981 to 2010 as its Agriculture Director and as a consultant to countries worldwide in the same capacity since then, Davis urgently seeks the resources necessary to begin the transformation of the corporation, which he believes could see a turnaround in three years.
“We have a strategic plan and we have a strategy to cater for how we want to spend that money on the estates. We have submitted a plan of what we want and to dispose of our bond funds. That is where we are. We need $42 billion but we agreed GuySuCo will generate funds though its operations. What we need money for, we already have a clear idea of what we need to spend that money on. We need to spend money on the refurbishing of our fields and factories, so as to enable us to start producing at more efficient and more modernised existing facilities. That is the only way,” he said.