…Opposition deeply concerned over transaction
…says future generations will have to carry debt burden
Close to one month after announcing plans to seek a syndicated bond worth $30 billion to assist with the revitalisation of the cash-strapped Guyana Sugar Corporation (GuySuCo), it has been announced that Government was successful in acquiring this loan from several commercial banks.
SPU/GuySuCo Head Colvin Heath-London
Head of the Special Purpose Unit (SPU) of the National Industrial and Commercial Investments Limited (NICIL), Colvin Heath-London told sections of the media on Wednesday that the bond was secured at good rates with several banks, including Trinidad-owned Republic Bank being the major lender.
He disclosed that the disbursement of this massive loan to GuySuCo could take place in two weeks’ time.
Heath-London who also heads the new GuySuCo Board said discussions regarding a proposal for these commercial banks to take a sum in exchange for what is owed to them have also been initiated. According to him, those discussions are going well and it is hoped that these institutions will buy into the idea.
The idea behind the borrowing of this syndicated bond is to assist the SPU with the reopening of the estates as an example to prove to potential investors that they are viable. Heath-London was clear that the loan will also assist with plans to make GuySuCo debt free and return the industry to profitability.
He also disclosed that plans are being made to pursue several other new initiatives which include producing plantation white sugar and packaging sugar for concentrated markets, and starting a molasses and cane juice business, among others. He described the initiative as creating a new GuySuCo.
The Opposition is of the firm view that the idea of securing a syndicated bond is mainly aimed at clearing the multibillion-dollar liabilities that GuySuCo has accrued, in order to give “handpicked” investors a clean slate and better opportunities to maximise their profitability when they purchase estates.
Finance Minister Winston Jordan had said the money Government hopes to acquire as a loan to fund the operations of these sugar estates should be acquired before mid-March. He also declared that revenues generated from the sale of estates and other assets would be used to repay the loan.
Some 4000 sugar workers from Enmore, Rose Hall and Skeldon were dismissed from their jobs following the downsizing of the sugar industry which began to take effect in late 2017.
Opposition’s scepticism
When contacted for a comment on the announcement by the GuySuCo Chairman, Opposition Leader Bharrat Jagdeo said the People’s Progressive Party (PPP) is very concerned about the disclosure given the fact that Government had claimed falsely for months that the PPP had left the sugar industry indebted by $84 billion.
Jagdeo said the loan or bond taken by this Government is bigger than any other loan that has ever been taken by the PPP. The Opposition Leader argued that if one were to do a closer analysis of the debt Government claimed was left by the PPP, one would recognise that a significant portion of debt is related to pension liabilities, long term debt (contracted on concessional terms), and payments outstanding to the Guyana Revenue Authority (GRA) and the National Insurance Scheme (NIS).
Jagdeo, an Economist by profession, stated that the $30 billion bond was a ‘commercial debt’ that may have not even been concluded on concessional terms. He said the public, like the PPP, is yet to learn what are the terms under which the bond was secured and what are the concomitant consequences of the move by Government.
He questioned whether this move by GuySuCo and NICIL even fits in with the long-standing policy of the current Government to borrow long-term loans only on concessional terms.
Jagdeo therefore expressed scepticism and worry over the fact that the proposal by the Government to spend $30 billion on three or four estates could result in a significant portion of the funds being “wasted” given the track record of the PNC Administration and no public statement fron the APNU/AFC Government.
He was particularly concerned that future generations would have to carry the burden of paying back the bond that Government has received and will be stuck with the debt.
The Opposition Leader said the PPP would be examining all aspects of the transaction over the next few days and will be seeking answers to ensure that the process to secure and disburse the bond is transparent. Jagdeo said Government will have to disclose whether it gave a Government guarantee as collateral to secure the bond or whether the assets of GuySuCo were pledged.
Either way, he will be seeking pertinent answers and information about the transaction.
