The Guyana Sugar Corporation (GuySuCo) is still awaiting the sums required to revamp its operations but last week received $1.2 billion for operational expenses in addition to $2 billion secured previously.
In August, newly-appointed Chief Executive Officer Dr Harold Davis Jr had said that GuySuCo could not begin the implementation of any of its modernisation plans as it had not yet received the required sums from the $30 billion that was secured by government’s holding company, the National Industrial and Commercial Investments Limited (NICIL) and its Special Purpose Unit (SPU).
Asked about the matter last Thursday, Minister of Finance Winston Jordan told Stabroek News that another disbursement had been made.
GuySuCo’s Public Relations Officer Audreyanna Thomas confirmed yesterday that the corporation received $1.2 billion last Tuesday for operational expenses such as the payment of wages and salaries, among other expenses.
But the corporation is still waiting on monies to begin recapitalization works for the three estates which it controls; a plan government believes could make the industry viable and assist in safeguarding the future of the 11,000-plus workers there.
Jordan told Stabroek News that those monies will come soon enough and the payments received by GuySuCo was in keeping with the agreement of the bond secured. “They have to get the money in accordance of what they asked for and whether what they asked for is consistent with what the financing was given for,” he said.
“They asked for $1.3 billion and they got it. It is like a loan, you get a loan but all don’t disburse at one time; it is disbursed on requests. When you go and get a loan to build your house do they give you all the money at one time? It is the same thing,” he added.
Last week’s disbursement will make the third received by the corporation as two – one for $880 million and another for just over $1.1 billion has already been given.
GuySuCo has no interactions with the bank since, through the third party agreement, the SPU is the trustee and is answerable. The SPU has said that GuySuCo must submit applications that are vetted to make sure it meets the approved criteria of the bondholders.
But during the five-month period that the corporation operated without a Board, there had been a tussle between the company and the SPU over its operations. GuySuCo had been lamenting that it could not begin its recapitalization programme as it did not have the money needed. The SPU had fired back saying that it gave more than $2 billion to the corporation. While it did not state when funds for capital expenditures would begin to be disbursed, the SPU said that monies would be given in a structured manner.
“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”, a statement from the SPU had said.
“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.
Republic Bank last month also had to resolve an issue pertaining to the use of the funds as they had cause to query certain payments made from the first $2 billion disbursed.
More recently, following reports that the SPU has been doing maintenance and rehabilitation work at shuttered estates, with one of the most recent projects being the rehabilitation of the Estate Lounge at GuySuCo’s LBI office, the corporation put out a statement saying that no one was authorised to undertake any works without its approval.
Minister of Agriculture Noel Holder had said that he expected that when the new Board is appointed, the tussle between GuySuCo and the SPU would come to an end. He said that the two sides would have the opportunity to meet “first to try to trash out any differences” before his or any subsequent Cabinet intervention.
Holder also reiterated that funds secured by the SPU would be used to undertake a three-phased approach in the revamping of the sector. “The funds are needed and will be used in a three-phased project where the first is recapitalization, then we move to white sugar [production] and last is co-generation. A state paper went to the parliament where it explained in detail where we were going and what would happen,” he said.
A new Board was announced last month with John Dow being named as its Chairman.
The Minister of Finance reported that since its establishment, there has been a noted improvement between the two entities and he expects that relationship will be further improved.
“The thing has improved since there has been a new Board at GuySuCo. That Board has met with the Board of NICIL, they have been able to iron out many things. They are a couple more (issues) and they will meet shortly again to iron out the rest. There is a better communication than when they didn’t have a Board,” Jordan said.
He was quick to say that it was a work in progress, as, when asked if the relationship and operations between the two were going smoothly, he responded, “I won’t say smooth but far better.”