The Guyana Sugar Corporation (GuySuCo) is set to begin the process of buying back its co-generation plant which was sold by the previous government in April of this year for US$30M in a deal that had raised questions.
Skeldon Energy Incorporated (SEI) was a special purpose company created for the sale and is jointly owned by the Guyana Power and Light (GPL) and government holding company, National Industrial and Commercial Investments Limited (NICIL). The then PPP/C Cabinet approved the sale as well as the Power Purchase Agreement (PPA) between GPL and GuySuCo. The sale had been seen as a bid to provide a cash infusion into the cash-strapped and beleaguered corporation.
Stabroek News was reliably informed that so far the sugar company has already received US$19M through the arrangement, however, the process has been stalled under the new APNU+AFC Coalition administration. In light of the ongoing concerns and the Commission of Inquiry underway into the sugar sector, a decision was made to reabsorb the Skeldon Co-generation plant as it has much needed income potential.
The special purpose company created to facilitate the sale will most likely be dissolved, according to a source, with NICIL working out the terms of the reabsorption by GuySuCo.
This newspaper was reliably informed that SEI was to be managed by Finnish company Wartsila (Guyana) Inc and there has been no action on ending this component of the sale.
The sale of the co-gen plant also encompassed the three Wartsila units at Skeldon. Stabroek News was told that the intention is to bring the plant back under GuySuCo’s control and for a new PPA to be worked out with GPL for the sale of power to the national grid that would be more lucrative to the sugar corporation.
Former head of NICIL, Winston Brassington had told reporters in April this year that Wartsila assumed management of the energy assets on April 1, 2015. According to a press statement issued, SEI would 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 would be via the sale of power under the two PPAs to GPL and GuySuCo.
Since the sale in April there was never any follow up as to which institution debt financing would be obtained from and Brassington did not respond to questions when they were asked during the press briefing at the time, only stating that “in due course,” additional financiers would be revealed.
Brassington had said that Wartsila would spend US$3M to bring the units as well as the co-generation plant to optimal capacity and meet Wartsila’s standards. Currently, the three-generator Wartsila plant has an installed capacity of 10 megawatts (MW) while the co-generation plant which uses bagasse to generate power has an installed capacity of 30MW. He said that in order to harness the optimal capacity, the transformer capacity would need to be enhanced.
He had downplayed the public perception that GuySuCo was once again receiving special treatment from the government which had been seeking to transfer funds to the cash-strapped, state-owned sugar company in the absence of the National Assembly.
CEO of GuySuCo at the time of the sale, Raj Singh did not respond to questions on whether the creation of a special interest company to purchase the Skeldon energy assets was an informal bailout of GuySuCo.
The decision by the government to create SEI came just weeks after former President Bharrat Jagdeo confirmed that GuySuCo was the final destination for $3 billion which the then Donald Ramotar government had unsuccessfully attempted to transfer from the Guyana Geology and Mines Commission to the Central Housing and Planning Authority in March.
