Latest update March 28th, 2024 12:59 AM
Mar 09, 2016 News
By Sase Singh
INTRODUCTION
The real challenge remains the Demerara Estates, especially the West Demerara Estates and that Skeldon Factory (not the fields). So although the decision to close the Wales Estate will be a very difficult one, holistically, it can be seen as a decision that is best for all of GuySuCo.
But before we can make any further decisions on what we are going to be doing with the rest of the industry, at least, get the elementary numbers right. This is what the Parvatan Commission failed to do.
I took the opportunity to peruse Appendix 3 of the Parvatan Report – Estate Losses for 2014 and Table 15 (breakdown of Estate Unit Cost of production -2014) and the figures do not even reconcile. This is horrible financial analysis; extremely horrible.
The more legitimate of the two documents appear to be Appendix 3 – Estate Losses that seem to have been derived from the Finance Department of GuySuCo. When one crunches those numbers, one finds that the cost per pound excluding depreciation and adjustments is much less than what this Parvatan Report is advising.
This goes to the core of the issue – reliability of the numbers. These numbers in the CoI Report, with respect to the unit cost per estate, cannot stand up to scrutiny. If we cannot trust the financial analysis, then there is an unclear basis for making industry-wide decisions on GuySuCo’s future. This scares me; this really scares me. If this is the kind of “wooly number” we will utilize to recommend wholesale privatization, then I have the Brooklyn Bridge to sell.
It was expected that this Parvatan Commission would have addressed those cost elements that can influence and attack the high cost of operations. Unfortunately, although we do have some more information because of this report, a comprehensive roadmap is not before us because a professional Independent Business Review was not done.
The collection of recommendations coming out of the economic/finance sub-committee continues to be the weakest link from this report. One struggles to find robust restructuring advice in this COI Report.
Every time I read this report it walks you right back to a policy recommendation that comes across as pre-mediated; namely industry-wide privatization. Was it an academic exercise to produce an “academic outcome?”
When you read this document from back to front, you cannot find any serious attempt to provide an unbiased view of the company’s financial forecast with deep and thorough analysis. I cannot find an end product that offers a structured plan with different strategic options for the decision makers to ponder.
I pity the Cabinet of Guyana that is provided with such a document to make life-defining decisions for thousands of citizens. I can very well understand, President Granger opening it up for public scrutiny, since the document is not “decision-making ready.”
RECOMMENDATIONS OF THE COI
For those who have not had the privilege of reading this report, especially those field and factory foremen these are the recommendations:
1. The privatization of GuySuCo. The process should start as early as practicable and aimed to be completed within three years (meaning by the start of 2019).
2. As a consequence of the above, the State (Government and people) divests itself of all assets, activities, and operations currently associated with GuySuCo.
3. In the interval, as the privatization is awaited, the new management of GuySuCo must focus on basic essentials to rehabilitate the fields, factories and infrastructure of GuySuCo.
There should be no accommodation for new projects, which will demand limited funds. The aim is to make the estates more saleable and attractive to investors, both local and foreign. A few expressions of interest, both formal and informal, have been received.
4. While the ongoing process of amalgamating estates for obvious economies of scale may continue, the COI does not recommend closure of any estate at this time.
5. Financial support in the short term will be needed and this should be provided by the government on a timely basis.
6. That there be the earliest possible implementation of the recommendation in the report of the Commission. The Management of GuySuCo must immediately direct its attention and focus on reducing operational cost, especially employment, returning to basic agronomical practices, rehabilitating its factories and strengthening supervision.
THESE RECOMMENDATIONS
Firstly, I want to make it absolutely clear to the readers, this CoI Team recommends that GuySuCo must be sold to private dealers (removed from the books of the State) irrespective of the positive socio-economic purpose that GuySuCo serves. This socio-economic impact is felt mainly across Coastal Berbice (Corentyne and West Berbice), which has very few alternative human development options.
Demerara, on the other hand, has greater scope to survive a withdrawal from the sugar industry. However, Berbice will experience a major economic and demographic decline that will lead to more crime, more drugs, more poverty, more human brutality, and generally a total rural blight which will invade Berbice as ghost villages start to multiply.
I have seen these kinds of towns in the North of England and in the South of the United States. It is painful to watch good human beings wallow in hopelessness, because some private sector company was only interested in harvesting the company for all its assets and profits, and when there are no more profits left to harvest, they walk away leaving ghost towns behind.
I am pleading with President Granger to distance himself from this plan to destroy the sugar industry, it is not the legacy that any leader would want to leave for his people.
Indeed, things are bad in the sugar belt and this industry is a burden on the Treasury, but what this COI Report is recommending will make this burden worse.
You are the President of all of Guyana and thus, all of the people’s welfare is your responsibility. If this report is followed, we will not have human development in the sugar areas, we will have human annihilation.
The political implication is too ghastly to even contemplate. GAWU has to wake up and revert to widespread sensitization across the sugar belt as to what is in this dreadful CoI Report. This is the time for workers’ mobilization and militancy; not complacency. But let me be clear, I am not calling for political war; I am calling for GAWU to spread the word on this report but at the same time, recognizing their strength, sitting with management to chart a course to push the cost of production down. As one Team (workers and management) focused on one objective – saving GuySuCo, there can be much hope.
From the limited evidence provided in this report and from what was publicly available before, GuySuCo has to incrementally cut the “gangrene out” – thus closing down Wales is a tough but necessary decision.
Closing Wales will free up over G$1.9 billion diverted from the better performers like Blairmont and Albion. But wholesale privatization is not the answer.
I will develop this point next week by looking at the performance of the industry estate by estate, so that the workers of GuySuCo can know the facts. The bottom line remains, the high-cost estates will have to be rationalized using a collection of criteria including realistic options to reduce the cost of production, and the required cost of refurbishment and established processes to mitigate the social fallout from closing an estate. It is important to save the many by cutting out the few.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
Mar 28, 2024
Minister Ramson challenge athletes to better last year’s performance By Rawle Toney Kaieteur Sports – Guyana’s 23-member contingent for the CARIFTA Games in Grenada is set to depart the...B.V. Police Station Kaieteur News – The Beterverwagting Police Station, East Coast Demerara (ECD) will be reconstructed... more
By Sir Ronald Sanders Kaieteur News – In the face of escalating global environmental challenges, water scarcity and... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]