Deposit US$2M in escrow account
-Linden power company urges Linmine
Stabroek News
August 17, 2002
The Linden Power Company (LPC) yesterday issued a demand to the Linden Mining Enterprise (Linmine) for the bauxite company to deposit US$2 million into their escrow account for outstanding payments.
LPC has also given notice to Republic Bank for it to draw US$702,000 from the escrow account for unpaid invoices. This follows Republic Bank's decision last week to foreclose on LPC over a US$5M debt.
Vice-President of LPC, Gene Satrap said he is available to meet with President Bharrat Jagdeo if the Presi-dent wishes to resolve the issues before arbitration commences in the United States.
"The government's failure to make regular subsidy payment to Linmine for invoiced electricity generation and power capacity due Linden Power Company in Linden has forced the Republic Bank Limited of Trinidad and Tobago this past August 6 to name a receiver/manager in the debenture between Republic and LPC," a press release issued by LPC yesterday stated.
The release said that based on Linmine's failure to pay outstanding invoices, LPC has advised Republic Bank of Trinidad and Tobago to draw on the existing escrow account in an attempt to bring the amounts current that are owed to the bank.
In addition, LPC has formally issued a notice to Linmine and the government that because outstanding invoices exceed 60 days and have reached over US$2 million, an additional deposit of US$2 million must be put into the escrow account in Trinidad and Tobago by September 1.
The release said members of the LPC staff in the United States travelled to Guyana at the end of July to negotiate with President Jagdeo and Prime Minister Sam Hinds in an attempt to reach a settlement on the outstanding debt and avoid the need for the bank to become involved in the collection of money owed to LPC by the government and Linmine.
LPC said while there was an oral agreement reached with the President to seek postponement of the bank's action, the company was informed that Linmine's United States-based lawyers deterred the Prime Minister from executing the document that was to be delivered to the bank in Trinidad.
This agreement was to forestall the bank from taking control and selling the property, in whole or in part, commencing with the naming of the receiver/manager.
Quoting Satrap, the release stated: "It's a shame that while Mr Jagdeo and I reached an understanding and paved a road to settlement that the Linmine American-based lawyers were able to scuttle the accord and drive the bank into its action that would have been avoided. I only hope that what has occurred will not lead to an eventual collapse of power generation in the Linden community. Obvious-ly the bank is not in the power generation business and with elimination of the senior operating personnel's participation from America, the infrastructure and pipeline to parts and engineering personnel from the United States have been severed. In addition to the power plant, LPC has invested substantially in the Linden community. As citizens, we have made almost one hundred contributions in cash or personal property to the immediate Linden community. LPC has donated to many significant charities and individuals over the period."
Among the organisations Satrap named were Mount Carmel Church, St Aidan's School and the Assembly of God.
The individuals who benefited from LPC's assistance included Toshoya Douglas for her Youth Challenge Guyana project, Douglas Joseph who attended NOSCO Academy of Theatre Arts in Nova Scotia, Canada, and Mr and Mrs Vangronigen to rebuild their home when it was destroyed by fire.
Satrap said a significant effort was committed in Cinderella City in Amelia's Ward to construct a potable water system and to construct a feeding kitchen for disadvantaged children.
"We only hope that because Linden is not part of the ruling party that certain individuals in the government do not intend to abandon Linden, a vital part of Guyana," he said.
LPC is owned by Texas Ohio Energy Inc (TOE) of the United States.
Republic Bank has named local attorney-at-law Stephen Fraser as the company's receiver/manager.
LPC issued a debenture on January 17, 2000, in favour of Republic Bank with a first charge to secure a debt of US$5 million to rehabilitate the company's operations.
The debt carried a year's moratorium on the principal but payment of interest in 12 monthly instalments of US$45,833.33 in the first year. Thereafter, US$95,170.40 was to be paid each month over six years. The company is also indebted to the government.
In February, 2000, the government converted its lease purchase agreement with TOE to a sale agreement valued US$2.05 million and a second debenture was issued in government's favour.
This was after the firm had difficulty in meeting its lease payment and debenture set out for the debt to government to be cleared in quarterly instalments over eight years at 10% per annum and amounting to US$69,675 per quarter.
LPC found itself in a financial crunch recently and had to lay off 75% of its staff. The company has claimed that it is owed over US$0.5 million for electricity supplied to Linmine and this exacerbated its fragile financial situation.
Linmine has denied this and has said that LPC did not honour a series of commitments upon the privatisation of the electricity service.