Govt. encounters limited providers for co-gen, white sugar plants

Nov 02, 2018 News

Minister of Finance, Winston Jordan disclosed to Parliament that feasibility studies have been done on both co-generation and plantation white sugar plants for the ‘right-sized’ Guyana Sugar Corporation (GuySuCo).
Jordan provided answers to written questions from People’s Progressive Party (PPP) Member of Parliament, Irfaan Ali, who requested information on how the $30B syndicated loan, specifically the setting up of co-generation plants at Albion and Uitvlugt along with a white sugar plant.
Jordan stated that both studies reflect positive outcomes based on current production inputs. He stated that the outcomes would improve as general efficiencies improve.
“Designs are available. However, it should be noted that there are limited providers of the mentioned plants; hence, the providers will provide the final designs when requests for proposals are issued,” Jordan stated.
Earlier this year, National Industrial and Commercial Investment Limited (NICIL) successfully negotiated with a number of local banks and other financial institutions to raise the bond.
The transactions were being handled by the Hand-in-Hand Trust with Republic Bank, and reportedly the Guyana Bank For Trade and Industry.
At the end, the negotiations for what was considered the biggest facility of its kind, locally, NICIL managed to secure $30B with $17B available under the first tranche.
In August, NICIL said it had released almost $2B to the smaller-sized GuySuCo.
Since then, the bond facility has been suspended by Republic Bank, which had objections to GuySuCo using the monies to pay off its debt at another bank.
Republic Bank had written to Hand-in-Hand Trust complaining about the misuse of the funds by the cash-strapped GuySuCo.
Jordan explained that it was agreed that the net proceeds from the issue of the bonds would be applied exclusively towards financing GuySuCo, in particular to acquire two co-generation plants; to upgrade existing factories to provide plantation white sugar and to build storage and packing facilities.
He stated that the funds was also expected to be used to contribute to two years of general operational costs, excluding the repayment of financing cost and other debt servicing commitments to financial institutions.
‘GuySuCo was asked to present a plan that would make the entity viable.
GuySuCo presented a plan to the Government for consideration. Underpinned by a 10-year supporting cash flow projection, the plan, for the most part, spoke to upgrading two plants – Albion and Uitvlugt – to produce plantation white sugar and generate electricity,” Jordan stated.
The Agriculture Ministry and GuySuCo have been at deep odds with NICIL’s Special Purpose Unit (SPU), a special department, which is overlooking the divestment and privatization of the three estates.
In fact, the Agriculture Ministry and GuySuCo reportedly objected vehemently to a board named earlier this year with SPU’s head, Colvin Heath-London as the Chairman.
Another board was recently named.
The sugar industry has fallen to an all-time low with production expected to barely scrape past the 100,000-tonne mark, the lowest in decades.
The cash-strapped corporation has been demanding billions of dollars annually in bailouts from consecutive Governments as production costs soared to almost four times what sugar was being sold for on the world market.
The industry has seen more than 7,000 workers sent home since late 2016 with the workforce just over 10,000 now.
The administration, unable to afford the bailouts, is in the final stage of assessing a number of offers for the three closed estates and has indicated that there are some serious offers, including from the Kingdom of Saudi Arabia, for GuySuCo.

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