GUYOIL pressing Government to honour GEC's $1.2B debt
THE board of directors of the state-owned Guyana Oil Company Limited (GUYOIL) is calling on the Government to honour a debt incurred by the Guyana Electricity Corporation (GEC) to the company in the sum of $1.2 billion. The money is owed GUYOIL for freighting fuel for the power company from Trinidad and Tobago and Curacao. The debt, a GUYOIL official said Thursday, goes back more than five years. Addressing the company's 23rd Annual General Meeting (AGM) at its Alexander Street, Kitty offices on Thursday afternoon, Board Chairman Mr Edgar Heyligar contended that the matter of GEC's debt was of grave concern to the board, adding that observations on the issue made by the company's auditors, the accounting firm Deloitte & Touche, were "understandable and justified". The debt issue first surfaced during the reading of the auditors' report for the fiscal year ending December, 1998 by a representative of the accounting firm. He alluded to the fact that provision, in the sum of $30.2M had already been made for such balances as GEC's indebtedness, under the column of `heading of bad and doubtful debts', and that any adjustment to the proviso would have dire consequences on the company's profit and loss account. Under the circumstances, Heyligar said, "I feel what is required now is an assurance from the Government, in light of the privatisation of GEC, that this debt will be mitigated by the Government." Failing this, he said, the board will have no alternative than to "resort to much provisioning for a [debt] write-off, which will weaken the company severely". Already, Heyligar said, GEC's debt to the company is equivalent to 58.7 per cent of its retained earnings. He said that were it a private sector undertaking, the company would have stopped freighting fuel for GEC a long time ago. "But in the national interest of the country," he observed, "we cannot do so. If we do, the country will be held at ransom." The auditors said that in light of developments with the GEC debt, it is uncertain whether the trade debt totalling $982.5M reflected in the net debtors and pre-payment balance of $1.3 billion on the balance sheet are collectible, and whether the company's profit and loss were "fairly stated". GUYOIL has declared a pre-tax profit of $820.7M for 1998 as against $839.2M, a decrease of 2.3 per cent, on its performance the year previous. Despite this fall in pre-tax profits, it has managed to exceed its budgeted pre-tax profit by $289.3M, and its after-tax profit by $151.6M. Heyligar described the company's performance for 1998 as "pretty heartening", in light of what transpired during post-elections 1997 and the better part of 1998, when most companies were returning reduced profits. He said the company "ensured it generated enough profits to meet its statutory and corporate obligations as well as contribute to its voting shareholders equity". (LINDA RUTHERFORD)
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