Government has abandoned efforts to obtain $3B from the Guyana Geology and Mines Commission (GGMC), a source close to matter said on Friday.
“They got the money from GPL (Guyana Power and Light) to pay GuySuCo so they no longer pursuing the GGMC Avenue,” the source told Stabroek News.
The source referred to GuySuCo’s sale of its co-generation plant and three Wartsila power units at Skeldon to a state-owned company specially created for the purpose at a price of US$30 million saying that those monies will be used in the ailing sugar industry.
In that sale, Skeldon Energy Incorporated (SEI) will be jointly owned by electricity utility, GPL and government holding company, National Industrial and Commercial Invest-ments Limited (NICIL).
Cabinet approved the sale as well as the Power Purchase Agreement (PPA) between GPL and GuySuCo,
According to a press statement issued, SEI will be funded with equity financing of US$5M from NICIL and US$4M from GPL and US$21M in debt financing from GPL and local and international financial institutions. Repayment of the financing will be via the sale of power under the two PPAs to GPL and GuySuCo.
Since January, the government has been trying to access the $3 billion from GGMC for the Central Housing and Planning Authority (CH&PA). First, it sought to secure the funds through a loan agreement—which was challenged in court–and then by a direct transfer on the basis of Cabinet approval.
Following the court action, sources said the Ministry of Natural Resources and the Environment and the Ministry of Housing and Water presented a memorandum to Cabinet which approved the transfer of $3 billion to the CH&PA to support the development of housing infrastructure projects in mining communities.
The Cabinet decision said that the transfer was to support the development of housing infrastructure projects in mining communities and other areas where miners’ settlements occur.
However, in the face of ongoing scrutiny, the GGMC sought legal advice from law firm Cameron and Shepherd, which advised that the agency couldn’t be directed to move money to another agency.
Former president Bharrat Jagdeo, at a press conference last month, confirmed that GuySuCo was the intended beneficiary of the $3 billion.
At a news briefing at PPP headquarters Freedom House, Jagdeo said the funds are state funds and do not belong to the mining sector and the transfer was solving two problems at the same time. He said the money in the GGMC treasury currently is earning less than 2% interest as opposed to the 5% per annum stipulated under the original loan agreement with the CH&PA and that the struggling GuySuCo would be receiving a much-needed inflow of money.
Analysts had argued that two state agencies should not be permitted to enter such a transaction outside of the Consolidated Fund.
Such inter-agency transactions, they say, would lead to chaos in the public accounts and make a mockery of parliamentary oversight.
The revelation of the proposed loan in the media sparked concerns about government seeking to circumvent constraints on spending ahead of the May 11th general elections.
The GGMC subsequently said that the proposed loan should not be seen as an isolated case and cited 33 instances where it provided financial assistance to various projects totalling over $8 billion between 2012 and 2015.
Additionally, the GGMC had said it made contributions to the Consolidated Fund in the sum of $6.8 billion from 2006 to 2012.
Following the Cameron and Shepherd advice, the GGMC had sought other legal opinions.
