Oct 03, 2015 News
By Abena Rockcliffe
GuySuCo is bankrupt; sugar is being produced at a price that knocks Guyana off of the competitive market and factories countrywide are operating at a loss.
This is the dire situation that the Commission set up to examine the state of the Guyana Sugar Corporation (GuySuCo) has found.
With such facts, observers are saying that nothing short of divine intervention can save the sugar industry.
All this was laid out yesterday during a press conference held by Minister of Agriculture, Noel Holder at his Ministry.
He was accompanied by Chairman of the Commission of Inquiry (COI), Vibert Parvatan and other experts including Professor Clive Thomas.
Parvatan indicated that the Commission has not been able to submit its report at the end of September as it had anticipated.
He owed this to the fact that an enormous amount of work still had to be done. Parvatan said that the Commission had completed taking submissions but had to make a few exceptions, all of which contributed to the delay.
Because the Commission is yet to complete its work, Parvatan was reluctant to make certain pronouncements and declined to answer pertinent questions.
However, he was keen to note some of the overall findings that are being taken into consideration.
Perhaps one of the most stunning revelations was the fact that the Commission was able to confirm that no factory in Guyana is recording profits.
“Every estate, without any exception, from Uitvlugt to Skeldon is operating at a loss,” said Parvatan.
He added that the sugar industry has been losing billions of dollars annually.
The Chairman told the media that this has been a trend for several years starting as early as 2005. According to Parvatan, last year alone, the industry’s losses amounted to about $17B.
He said that each year the figure continues to climb; suggesting that this year’s loss is greater than the previous one.
Parvatan, a former Minister of Agriculture, also noted that the unit production cost for sugar continues to increase yearly.
He said that sugar is currently being produced in Guyana US45cents per pound, while the world production price of sugar stands at US 13 cents per pound. Therefore, Guyana is producing sugar at a cost three times that of other countries. As a result, Guyana is being pushed off of the competitive market as the country will have to sell its sugar higher than others in order to make a profit.
The Commission also has to consider that GuySuCo is bankrupt and the government is saddled with the task to repay a $200M loan for the Skeldon factory.
“In essence, the accountants will say that GuySuCo is insolvent.” In this regard he noted that the past government as well as the present government have been “committed and compelled to inject funds under the caption of bailout or subsidies to keep the company afloat.”
Even as he acknowledged those subsidies; Parvatan was keen to note that subsidies or occasional bail out is not new and is not unique to Guyana. He said that the governments of Brazil and India made similar financial interventions.
However, Parvatan pointed out that these interventions cannot be never-ending or further strain will be placed on the economy.
“While subsidies are not new to sugar industries, the administration – the government of the day, conscious of its sympathy and support for the industry, acknowledges that they have their own limits in terms of funding.”
Parvatan explained that the sympathy of the government is what is keeping GuySuCo alive.
“If GuySuCo was seen as just a business, there would have been a very simple obvious solution. But to the government GuySuCo is more than just a business, it is complex, it is complicated but not insurmountable,” he stated.
He declined to divulge whether all of the estates will be retained.
Parvatan said that the Commission has already received several recommendations from persons who appeared before the Commissioners. However, he said that some of these had to be dismissed because they are impractical. Nevertheless, Parvatan declined to state some of the suggestions that found favour with the Commission.
The Chairman said that there had been interaction with former Chief Executive Officers of GuySuCo as well as former Directors of GuySuCo’s board.
Also, Parvatan said that the Commission benefitted from the view of several “outstanding businessmen.”
Parvatan said that the Sub-committees’ reports were submitted this week and each is being placed before the Commission for presentations and discussions. He said that that Commission is working to ensure that all the reports harmonize.
“We are trying to find a path that will be in the interest of the industry and Guyanese.”
He added that there is no “magical solution” and therefore, “whatever we do cannot and will not satisfy the expectations of every one.”
But the Commission is trying to find the best option for Guyana, Parvattan said.
Parvatan noted that he received no directions from the Minister of Agriculture on anything pertaining to the inquiry “so there is no foregone plan.”
The final report, according to Parvatan, will be submitted to the Minister on October 17.
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