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FM
Former Member

Govt forced to pay $606M interest on APNU/AFC’s poorly-negotiated bond – Finance Minister

$30B GuySuCo bond

…says PPP Govt shackled by penalty clause for early repayment

The $30 billion syndicated bond the People’s Progressive Party (PPP) inherited from the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government has so far forced the Government to shell out a whopping $606 million in just interest payments.

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Finance Minister, Dr Ashni Singh

This was revealed during Monday’s sitting of the National Assembly, during which Finance Minister, Dr Ashni Singh fielded questions from the main parliamentary Opposition on the Guyana Sugar Corporation (GuySuCo).

Specifically, he was asked how much of the $30 billion syndicated bond has been spent on GuySuCo since August 2020. According to the Finance Minister, $17.5 billion of the $30 billion syndicated bond that was negotiated has been turned over from the trustees to the National Industrial and Commercial Investments Limited (NICIL).

“A total of $17.478 billion, net of trustee fees of $121 million, has been disbursed by the bond holders to NICIL. Out of that amount, as at August 2, 2020, amounts totalling $10.27 billion had been disbursed to GuySuCo. As at December 31, 2020, amounts totalling $11.47 billion had been disbursed to GuySuCo.”

He also detailed how much of the bond the PPP Government has serviced so far, including the payment of a whopping $606 million in just interest. According to the Minister, the terms of the bond are locked in so as to prevent early repayment without penalty. The Government therefore has little choice but to continue honouring the bond, which is backed by a Government guarantee.

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The rationale for borrowing the bond was to recapitalise closed estates so they could be divested. This, however, never came to fruition

“This bond was concluded at an exorbitant interest rate of 4.75 per cent, considering it was backed by a Government guarantee and they locked in that interest rate with a penalty clause for early repayment,” Singh explained.

“And given the state in which the sugar industry was inherited after five years of neglect by the APNU/AFC, our Government has expressed very clearly our commitment to revitalise the industry to support the achievement of a diversified and modern sugar industry. We have already started to take steps to recapitalise the industry.”

The bond, which was heavily criticised at the time by the then PPP Opposition, was arranged by the Special Purpose Unit of NICIL back in 2018, and was intended to recapitalise GuySuCo and return it to viability after the former APNU/AFC Government had shut down four estates and placed thousands of sugar workers on the breadline.

The idea behind the borrowing of this syndicated bond was to assist the SPU with the reopening of the estates to prove to potential investors that they are viable. However, that plan never came to fruition.

Failed plan

If there were any interested investors, they never got the chance to purchase the estates after the then APNU/AFC Government fell to a No-Confidence Motion (NCM) in December 2018, precipitating a year and half of democratic struggles and delayed elections.

APNU/AFC’s downsizing of the sugar industry resulted in only the Uitvlugt, Blairmont and Albion Estates currently operating. After taking office last year, the PPP/Civic (PPP/C) Government announced in the 2020 Emergency Budget presented in September 2020, that some $5 billion would be injected into the sugar industry for the phased reopening of the closed estates.

The Guyana Sugar Corporation (GuySuCo) was allocated a further $2 billion in Budget 2021 by the PPP/C Government for capital works to be undertaken at the various estates to help in the turnaround of the sugar industry.

The PPP/C had promised on the campaign trail to reopen these estates, and within weeks of being in office, had taken steps in this direction. In fact, last September, the Irfaan Ali-led Administration had invited Expressions of Interest (EoIs) from investors.

According to the invitation for EoIs, “A joint venture, partnerships, or a leasing arrangement on the now re-opened vested sugar estates at Enmore, Rose Hall and Skeldon, and also on the operational sugar estates at Uitvlugt, Blairmont and Albion…” The notice invited “…interests from the private sector to participate in different forms in the ownership or operations of GuySuCo.”

GuySuCo has been eyeing the reopening of Enmore and Rose Hall Estates by 2022. It is expected that the Rose Hall factory will be the first to become operational, while the Skeldon factory will be returned to operation by 2023. The Wales factory will be divested.

With the efforts to revive GuySuCo, the Uitvlugt, Blairmont and Albion estates recorded the highest daily production for 2021, as well as 2020 when it was announced it had produced 710 metric tonnes of sugar on March 11.

Replies sorted oldest to newest

Fine, bellow about the interest on the loan and the loan itself. I see no mention that the funds were misused, unless I missed it. Who did they borrow from?

What if the coalition had not taken it out to sustain the sugar industry? Then the screams of "black man gon kill ahwe" would start.

The fact is, there should not have been any loan to raise money for welfare payments. Yes, welfare payments. The industry is dead, thanks to the cup PPP who did NOTHING for 23 years to revamp the industry, shift and realign to products which would sustain the industry. Thus borrowed money to pay laborers is welfare. Every pound of sugar sold brings more losses to the nation.

The PPP was too busy building giant buildings, fending off the DEA, CANU, etc. to notice the sugar workers. Keep putting X next to the cup you fools.

FM
Last edited by Former Member

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