$30B controversial bond arranged by APNU/AFC for GuySuCo exhausted – Min Mustapha

…says only $3.8B remained from NICIL bond when PPP entered office

The $30 billion syndicated bond that was controversially arranged by the National Industrial and Commercial Investments Limited (NICIL) under the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Administration for the Guyana Sugar Corporation (GuySuCo), has been exhausted.
This was revealed on Tuesday by Agriculture Minister Zulfikar Mustapha, while responding to questions during the examination of the Budget 2022 estimates for his Ministry in the National Assembly.
Opposition Member of Parliament Tabitha Sarabo-Halley questioned the status of the $30 billion GuySuCo bond which was arranged in 2018. In response, Mustapha revealed that the funds have been exhausted and that only $3.8 billion was remaining when the People’s Progressive Party/Civic (PPP/C) Administration assumed office in August 2020.

“That money started to use under the former Government, which GuySuCo has to pay it back. That bond has been exhausted. And that is why we were forced to give subsidies to GuySuCo, to continue the investment into GuySuCo,” he explained.
“I can’t say what the bond was exhausted on… however, some money was used from the bond to do some work in GuySuCo. I don’t have the details here. I will lay it over. Over the last 18 months, the bond was exhausted… when we took office, $3.8 billion was remaining out of the $30 billion,” the Minister added.
In June 2021, it was revealed that a whopping $606 million in interest payments were made so far on the bond. At the time, Finance Minister Dr Ashni Singh lamented that “this bond was concluded at an exorbitant interest rate of 4.75 per cent, considering it was backed by a Government guarantee and they locked in that interest rate with a penalty clause for early repayment.”

In fact, Dr Singh had said that the bond was no more than a ruse by the former Government, to borrow monies and keep it off the balance sheet, foisting it instead onto the NICIL/Special Purpose Unit (NICIL/SPU).
The Finance Minister had explained that when the bond was issued, it came with a Government guarantee that it would back the bond payments should NICIL be unable to make any payments. And this is just what the PPP Government had to do last year.
The bond, which was heavily criticised by the then PPP/C Opposition, was intended to recapitalise GuySuCo and return it to viability after the former APNU/AFC Government had shut down four estates and placed thousands of sugar workers on the breadline.
Back in 2018, NICIL, through Republic Bank, went out on a limb to arrange a $30 billion syndicated bond at a rate of 4.75 per cent interest and a five-year repayment period for GuySuCo.
According to the agreement between NICIL and Hand-in-Hand Trust Corporation as the trustee, the first tranche payment of $16.5 billion from the bond was to be used for a long-term project and capital financing for GuySuCo.
Specifically, the money was to be used to acquire two co-generation plants, upgrade the existing factories to produce plantation white sugar, build storage and packing facilities, and help pay for two years of general operational costs.
However, a significant part of the bond was never used for the purposes it was secured. The previous APNU/AFC Government itself had said that between July 2018 to February 2020, $9.7 billion was disbursed from the bond to GuySuCo to fund its operational expenditure – much of which was outside the terms of the bond.