2009/10 budget - CAP, Sugar Company get billions in government subsidy, Air J turns to the market
Published: Saturday | April 11, 2009
Contributed
The rails leading to Jamalco after Dean's damage in 2007. The refinery is in the background.
The Bruce Golding administration, it appears, does not expect to land a buyer for the assets of the Sugar Company of Jamaica - at least not this year - indicating that the state-run operation as well as the lagging fortunes of the bauxite alumina sector will weigh heavily on the public purse within the new fiscal.
Total subsidies or grants to public companies from the Finance Ministry's capital budget top $4.4 billion.
Air Jamaica which over the past four years, has got annual subsidies ranging upwards of $1.5 billion per fiscal cycle to $1.95 billion, was absent from the list.
The airline will instead go to the capital market for carry-on funds until it is sold.
Air Jamaica President Bruce Nobles said yesterday that Air Jamaica has been tapping commercial funds "for months" to service its debts from entities such as National Commercial Bank.
Nobles told the Financial Gleaner that he has sought funds from the market and facilities like PetroCaribe on an ongoing basis since he took over the airline last year, but skirted queries on just how much debt he had raised within the time.
He also told the Financial Gleaner that the funds from thhe government never came in the form of cheques to the airline but were also used to settle liabilities.
The cash-strapped, debt-ridden SCJ, however, remains tethered to Government's purse strings with a $747 million grant budgeted for the new fiscal year, which began April 1.
The 2009/10 Estimates of Expenditure merely referenced the figure as 'support' for the SCJ, whose factories and land have been placed on the market for sale and are being bid on by local and overseas investors.
21 per cent increase
Clarendon Alumina Partners, the vehicle holding Jamaica's remaining 45 per cent share in Jamalco, gets $3.65 billion, an increase of 21 per cent over last year's $3 billion cushion.
The funds are to facilitate payment to Alcoa - majority and controlling shareholder in Jamalco - relating to "outstanding production charges, co-tenancy expenses, and capital works for Jamalco operations," said the finance ministry's explanatory note.
lavern.clarke@gleanerjm.com
SOURCE: Financial Gleaner, Thursday, April 9, 2009
