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GEA pressured to pay Venezuela

As revelations about the former administration’s mismanagement of the PetroCaribe Fund continue to be made, Finance Minister, Winston Jordan, on Monday disclosed that having driven the Fund to a point of near depletion, the former administration pressured the Guyana Energy Agency (GEA) pay Venezuela amounts it was due to ensure timely cash payments to rice farmers. 

This is according to Finance Minister Winston Jordan who, during his presentation of highlights of the 2015 Estimates, said “the PPPC Government had mismanaged the PetroCaribe Fund, with only a small balance of US $0.8 million in the fund at the end of May 2015, whereas outstanding payments to farmers were in excess of US $17 million.”

In a bid to offset the outstanding payments,  Jordan revealed,  the “GEA…under pressure from the PPPC administration was forced to offset the cash amounts owed to Petreleos de Venezuela S.A. (PDVSA) against future shipments, in order to ensure that current payments to rice farmers were made at the due dates. ”

He did not disclose the exact amount the GEA was reportedly made to pay, and he did not pass up the opportunity to remind the National Assembly that it was the A Partnership for National Unity (APNU) + Alliance for Change (AFC) coalition government which “…came to the rescue, transferring over $5 billion to the Guyana Rice Development Board (GRDB) so that farmers could be paid.

Despite record-breaking production rates Guyana continue to struggle to find markets for its rice. The 400,000 tonne bar was broken in 2011 and the 500,000 bar broken in 2013. 2014 say the production of 635, 238 tonnes; 18.6 percent more than the year prior.

But Guyana cannot consume all the rice and paddy it produces, and the inability of producers and government to find solid and consistent external demand has led to a buildup of paddy stocks.

If markets are not found, millers will not buy rice to sell which means rice farmers will not be paid. If rice farmers are not paid,  the small businesses which revolve around rice farming will also suffer. Many rice farmers have outstanding loans and informal debts. Their ability to service these debts and loans, as well as maintain a living,  is dependent the ability of the relevant stakeholders to find markets.

Venezuela, which has ramped up its claim to Guyana territory in the past months, had indicated that it may not longer be continuing the rice-for-oil deal with Guyana.