Skeldon Energy Inc (SEI), is unable to secure any finances—finance it critically needs to fix the US$30M co-generation plant if is to continue to supply any significant electricity to the national grid and the people of Berbice.
The company requires US$17M to remedy the defects to the US$30M plant acquired two years ago from Guyana Sugar Corporation (GuySuCo).
Minister within the Finance Ministry this past week was facilitated on a tour of the facility, and SEI Chairman Lloyd Rose confirmed the state of affairs.
However, during the tour the media were informed that Government has never legally vested the assets owned to SEI, meaning the company has no collateral to approach any financial institutions to secure a loan or raise capital despite having an ambitious plan to raise the US$17M capital needed.
Government is looking to attach the co-generation plant to any deal it enters with an investor for sale of the Skeldon Sugar Factory.
This was confirmed by Minister Sharma, who told media operatives this past Friday that Government continues to hold onto the assets since it could possibly be bundled with any deal in a sale of the sugar factory, since no investor would want to purchase one without the other.
SEI Chairman this past week told media operatives that the company at present requires an immediate US$2.5M expenditure simply as a ‘stop gap’ measure in order to restart the plant.
The assets however have never been officially turned over to SEI, which means the company, despite its lofty plans, is dependent on the possible sale of the Skeldon Sugar Factory, since the co-generation plant could very well be part of the deal.
In fact, Minister Sharma hinted that there have been several unsolicited proposals which has since indicated that the ‘sharks are circling’.
He told media operatives the negative reports emanating from the plant have led to persons—the sharks—wanting the plant for next to nothing.
Sharma indicated that Government will soon be looking to incorporate a special purpose company in order to facilitate the sale within a few months.
But the financial situation at SEI is not as previously reported.
SEI is a Government owned company—owned by the National Industrial and Commercial Investments Limited (NICIL) and the Guyana Power and Light.
NICIL is the company responsible for looking after the affairs of GPL for Government.
The transaction saw GPL putting US$4M as equity to purchase the plant, while NICL fronted US$5M. US$21M was announced to be loaned in the debt and equity project. This was however never obtained. It was reported that GuySuCo owed GPL a significant amount of money for heavy fuel oil used for the plant.
The media learnt this week that only $11M was turned over as a loan, and the remaining US$10M announced was simply cancelled debt.
This means GuySuCo never actually received US$30M for the co-generation plant, but rather $20M; and to compound the situation, the assets have never been turned over officially to SEI.
The company on paper has an installed capacity of 30MW—40MW from the baggasse component, and 10MW from the Wartsila gensets.
It has been supplying on average 8MW to the grid.
The Skeldon co-generation plant was described by Minister Sharma as a ticking time bomb that currently requires US$2.5M in immediate expenditure as a stop-gap measure in order to restart the 30MW bagasse-fuelled component of the facility, and an additional US$17M in order to fix the deficiencies identified—identified a few months after the generators were turned on.
The co-generation plant was purchased from the Guyana Sugar Corporation (GuySuCo) for an announced price of US$30M by SEI—a special purpose company owned by the government’s holding company, NICIL and GPL.
The damning state of affairs was laid bare this past week by SEI Chairman Rose, who had moments earlier wrapped up a guided tour of the facility in Berbice for subject Minister Jaipaul Sharma.
It was explained that apart from the badly deteriorated state of the facility—six years into its 25-year life span—the boilers being used at the facility are simply not for use in Guyana’s conditions.
During the guided tour of the boilers, it was observed that the piping used to circulate the pressurized steam has eroded to a point where it now poses a safety hazard and risks an explosion.
Other visible deficiencies on the boiler were evident at the furnace doors, where the insulation was almost completely burnt out as a result of the heat.