Oct 12, 2015 News
Months after the Guyana Sugar Corporation (GuySuCo) sold its electricity generation facilities at the new Skeldon sugar factory, the company is yet to be paid in full.
There are also indications that the buyer, Skeldon Energy Inc (SEI)—the special purpose company that was created specifically to buy over the GuySuCo assets– is still determining how much it will be paying.
Earlier this year, the cash-strapped GuySuCo, which controls eight estates between Demerara and Berbice, announced that it was selling its generation facilities at Skeldon for US$30M.
The sugar company has only been paid US$19M (US$5M from NICIL and US$14M from GPL) and according to Chairman of the Board of Directors of SEI, Lloyd Rose, it is still to be determined how much it will pay off GuySuCo.
Rose said that SEI is currently conducting a technical evaluation of the assets which were purchased, with a view to determining exactly what it is worth and how much remains to be paid.
The official declined to comment further on the finalization of the deal.
It is widely believed that the previous administration came up with the sale of the assets to bail out GuySuCo, without actually concretizing a final deal.
SEI is jointly owned by Guyana Power and Light Company (GPL) and the National Industrial and Commercial Investments Limited (NICIL), two state-owned entities.
A key figure in the deal had been Winston Brassington, former Chairperson of GPL.
NICIL inherently is also the substantive owner of the power utility company GPL.
Compounding the strange deal is that since the sell-off of its generation facilities, GuySuCo has had to turn back and purchase electricity from SEI, at a so far unknown cost.
The billing arrangements have been on a month-to-month arrangement and vary each month depending on the energy demands of the sugar company. It was also pointed out that GuySuCo has seasonal demands.
Rose told Kaieteur News that there is a Power Purchase Agreement (PPA) that still has to be finalized between SEI and GuySuCo.
He said while a PPA did form a part of the transaction involving the sale of the assets, it was never finalized.
At present, GuySuCo takes the majority of power supplied by SEI with the remainder being supplied to the national grid.
As it relates to the electricity being sold by SEI to GPL for the national grid, Rose said that this too is determined by a PPA.
Meanwhile, as it relates to SEI still in the process of determining the true value of the assets it agreed to buy from GuySuCo, Rose told this publication that SEI has already had cause to ink a US$5M contract for the refurbishment of the equipment.
Last April, SEI and Wartsila, a Finnish company that manages power stations across the coastlands, executed two contracts – one for the rehabilitation of the generation assets to restore the equipment to its optimal functionality, and another for the operations and maintenance contract for the entire power plant operations.
SEI has said that since entering into those contracts, Wartsila has commenced its rehabilitation of the generation assets, which is expected to be completed by year-end.
“Operationally, Wartsila has also been managing and operating the co-generation plant per agreement.”
The Skeldon factory and its generators were commissioned in 2009 but have failed to live up to expectations, racking up significant losses. The generating facilities, especially, have been poorly maintained and managed, leading to shutdowns in Berbice and even across the coastlands.
The new Government has launched a number of audits and made sweeping changes to Boards of state agencies across the country to determine their health of the operations.
The running of GuySuCo, previously of the country’s biggest earners, has been a major thorn with questions continuing to be raised over the sale of assets and contracts.
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