Panama owes Guyana over $1B for rice shipments – Minister
Agri sector’s financial woes
…as GuySuCo unable to make next payroll
As the People’s Progressive Party (PPP) Government settles into office, every day it is uncovering numerous burdens it has inherited from the former A Partnership for National Unity/Alliance For Change (APNU/AFC). The latest is that a massive amount of rice was shipped to Panama but the APNU/AFC Government failed to collect any money for it.
The rice was shipped by the Guyana Rice Development Board (GRDB), on behalf of local millers who are required to pay an export commission. But according to Agriculture Minister Zulfikar Mustapha on Tuesday, some $1.184 billion is owed by Panama for the rice.
“There is also a delay in receipt of payment for rice supplied to Panama which owes millers $1,184,198,400. The entity has a current liability of $4.7 million. Its revenue stream can be adversely affected by the ongoing delay in payments from Panama.”
“My Ministry will act immediately to reverse these situations so that these debts can be paid from Panama. We will also meet with the millers to have them work on payments for the millers as soon as possible,” Mustapha said.
GRDB has even been delinquent with collecting the export commissions, with over $350 million outstanding. According to Mustapha, “initial checks reveal a delay in payments of commission to the Board by millers. At the end of July, millers owed $353,925,513.”
The previous A Partnership for National Unity/Alliance For Change (APNU/AFC) Government had often touted the healthy amount of rice being produced and the markets it was accessing. For the first crop of 2020, Guyana exported 242,812 tonnes of rice. And for 2019, 1,049,874 tonnes of rice was produced.
The Panama rice market was secured under then Agriculture Minister Leslie Ramsammy back in 2014. But under APNU/AFC, there have been controversies that featured the Panama market. One such controversy was in 2018, when a shipment of rice from Guyana was rejected on arrival in Panama since it did not meet the stipulated specification outlined by that country.
Reports had indicated that the rice was of substandard quality, prompting the rejection. The ensuing debacle had led to calls for a comprehensive investigation and the resignation of the GRDB Board and then Agriculture Minister Noel Holder.
The financial woes extend to the Guyana Sugar Corporation (GuySuCo), which looks set to miss payroll after August 21 and requires over $1 billion in subventions in order to survive until the end of the year.
According to Mustapha, GuySuCo will be unable to pay wages from August 21. This comes even as the National Industrial and Commercial Investments Limited (NICIL) has only disbursed half of the $1 billion GuySuCo had requested earlier this year.
“The Corporation will not be in a position to pay wages from the week ending 21st August. Under the previous Administration, a request was made to NICIL for an amount of $1 billion but only $550 million was received to date,” Mustapha said.
“The $1 billion is required to cover operational expenditure until the Corporation commences receipt of sugar proceeds which will become available in the second week of September,” he also said, adding that sugar and sales of molasses are insufficient to cover expenses during that period.
Mustapha noted that of the $30 billion syndicated loan the former Government borrowed in 2018 to recapitalise GuySuCo, only $10.2 billion has been paid out to the Sugar Corporation. This is a five-year loan, backed by NICIL assets and with an interest rate of 4.75 per cent.
“The (GuySuCo) Board received no answer as to how much was actually disbursed to NICIL and plans on repayment of the loan. To date, the Corporation has a total liability of approximately $9.5 billion,” Mustapha explained.
Meanwhile, the National Drainage and Irrigation Authority (NDIA) is also in financial trouble, with a shortfall of $89 million being discovered in the agency’s budget. In addition, a related request for funds was lodged with the Ministry of Finance under the former Government.
“There is a contract in the sum of $753,397,248 for the acquisition of fixed and mobile pumps and associated structures and spares. To date, $308,137,000 has been paid, however, there is a delay in supply and installation. We will work immediately to have this rectified and keep the public up-to-date with the progress. Locals to fix and install pumps.”
“Even as parts of our country are affected by flooding with residents inconvenienced and farmers losing crops and livestock, 20 pumps and 21 excavators were found to be inoperable with $23,842,320 owed to operators of equipment. The NDIA is tasked with ensuring that these outstanding payments be made,” Mustapha also said. (G3)