…as taxpayers could be left to foot the bill – Jagdeo
Government has recently announced that part of the $30 billion bond for the Guyana Sugar Corporation (GuySuCo’s) Recapitalization Project will be dispersed, but Opposition Leader Bharrat Jagdeo has said there are still many unanswered questions, especially relative to GuySuCo’s liabilities.
Opposition Leader Bharrat Jagdeo
In addressing a press conference on Thursday, Jagdeo raised concerns over the manner in which the matter is being handled, and used the opportunity to call on Government to ensure that certain issues are clarified.
But, more importantly, the former head of state noted that GuySuCo is still without a board. As such, he questioned whether the Special Purpose Unit (SPU), the National Industrial & Commercial Investments Limited (NICIL), or Finance Minister Winston Jordan are the sole decision-makers.
Since the corporation is without a board, and the SPU falls under the responsibility of the Finance Minister, all decisions are most likely to be made by him in the absence of that body, Jagdeo has said.
As of December 31, 2017, all of GuySuCo’s assets were transferred to NICIL. The operations of GuySuCo are being managed by the SPU of NICIL.
The $30 billion was raised solely on the Government’s promise to repay investors within five years, if the money is not repaid by NICIL. It was recently revealed that the bond represented one of the largest financial transactions in the Caribbean, mainly due to the Government’s guarantee. The bond also comes with a 4.7 percent rate of return for the investors.
But, on Thursday, Jagdeo revealed that the NICIL and GuySuCo’s assets were used as security for the money received from the bond holders. According to him, not only the four sugar estates that were closed, but also 100 per cent of Government’s shares in GuySuCo, based on the Vesting Order of the agreement, were used as security for the loan.
“The entire GuySuCo was transferred to NICIL, contrary to the view that it is only the four estates,” he said.
Jagdeo, a trained economist, reasoned that with a transfer of assets, all that is left are the liabilities of GuySuCo, which could best be described as a shell company.
He delared, “It is a bit confusing. Who owns the liabilities now?” And he explained that the liabilities included the $32 billion of pension liabilities. “Who will assume responsibility for this? This needs to be urgently clarified. We are in the dark,” he said.
The Opposition Leader also noted that there isn’t any clear plan as to how the Government would utilise and repay the bonds. As such, he said, he foresees that the first tranche of $17 billion, already received, has the potential of disappearing, and this could happen for the rest, too.
“…if this fails, the banks will seize assets used to secure the bond…the first call of bond holders will be on the assets of NICIL. The assets will include not only the GuySuCo assets, but other NICIL properties too,” he explained. He said if the bond holders sell those assets, they would still not be able to come up with enough money, and this could lead to them taking advances from the treasury to settle.
No policy
Further, Jagdeo noted, there was no clear and coherent policy implemented to assist with the management of the sugar sector. As such, he said, these policy issues must first be ironed out before talks about privatization get underway.
“There are many policy issues to deal with before privatisation…decisions were made and there was no study, no prospectus to detail those plans,” he observed.
Another important observation made by Jagdeo is that once some of the estates are privatised, a decision will have to be made about the quota of work and markets for each. He said if, for example, one or two estates are privatised, and they engage in the production of sugar, it would be interesting to know the formula that would be utilised to allocate the markets between the private and publicly owned estates.
“Secondly, there is a pricing formula for private cane farmers that is enshrined in legislation. Are you going to amend that? How are you going to treat that legislation? Are you going to insist that a private person follows the same formula, or are you going to create one?” he further questioned.
But Jagdeo didn’t stop there, he questioned who will take up the responsibility for drainage and irrigation on the private estates, and what tax regime will those estates receive. “There are tonnes of policy issues that need to be addressed long before you craft a framework for privatisation. We have silence on it. I am not even sure that they are addressing the issues in all the complexities that (they) deserve.”
The former head of state said he is not confident that either the $17 billion or the entire sum will be properly spent, and in the end, Guyanese tax payers may be left the heavy burden to foot the bill. “Guyanese have to understand: if we are not careful, we will hold the burden of all of this, because of incompetence and corruption,” he added. In a worst case scenario, the banks, could seize all assets, he said. (Samuel Sukhnandan)
