GUYSUCO debt now at $78.6B

Dec 27, 2015 News

…all 2015 revenues used for wages & salaries – says GUYSUCO CEO

With the Commission of Inquiry (COI) report into the Guyana Sugar Corporation (GUYSUCO) expected to be laid in parliament on Wednesday, the corporation’s Chief Executive Officer, Errol Hanoman, has revealed that it has succeeded in reducing and restructuring its debt.

Minister of Agriculture, Noel Holder

GUYSUCO CEO,
Errol Hanoman

According to Hanoman, recently, while the corporation debt stood at $82B at one time, it has been reduced to $78.6B as of this week. He acknowledged that the debt was still quite huge, but expressed assurance that a solution for paying off the debt will be found.
For this year, the corporation received a $12B subsidy from the government, provided for in this year’s Budget.
Though this cash injection would have helped with the debt, Hanoman revealed that all of GUYSUCO’s revenues went to wages and salaries. However, as the money has been coming in, he stated that the corporation has been paying off the creditors.
In one case, Hanoman stated that the $3B (US$15M) loan which GUYSUCO took in 2014 from the National Commercial Bank of Jamaica has been restructured. It is understood that at the time of borrowing, the loan was taken to finance the GuySuCo operations.
According to Hanoman, that loan was essentially a working capital facility. He revealed that this has actually now been converted to a three-year facility, an increase from the original one-year.
GUYSUCO has been in severe financial straits over the past few years, but has nevertheless been receiving billions of dollars in bailouts from the executive government. Along with the bailouts, it has incurred billions of dollars in debt.
The Skeldon sugar factory, commissioned in 2009, has accounted for much of those debts in its own right. The beleaguered factory, which only reached its production target in 2015, has incurred debts to the Guyana Revenue Authority (GRA), the National Insurance Scheme (NIS) and to regional and international banks and funding agencies.
Among some of the initiatives that GUYSUCO has been pushing to make money is the Enmore crystals, a form of upgraded sugar that has been marketed in Canada, the United States of America and Britain.
These markets were closed off to Guyana, after Government lost its claim to the ‘Demerara Gold” because of a legal case brought by Bedessee Imports Ltd. a foreign sugar manufacturing company.
“As you recall, the Demerara Gold, a brand that we made famous, could not be put on the North American market as a result of the litigation,” Hanoman recalled. The official also observed that the term ‘Demerara gold’ has become something generic, used to describe brown sugar.
“You’ll find Demerara sugar produced by Mauritius, (and also) in South Africa. So I think we have lost that opportunity,” he said. “So the Enmore crystals are the product now being used to get in there.”
He  noted that the corporation had only started production of the ‘Enmore crystals’ in 2015, but stated that come next year the focus will be to increase production.
Hanoman also reported that sales of value-added sugar have increased when measured against the 2014 levels. He stated that Guyana’s presence was advanced as a result in most of the CARICOM countries.
Sugar production for 2015 has been pegged at 229,215 tonnes. Holder projected that for 2016 sugar production is likely to reach 242,287 tonnes; a five per cent increase over the 2015 production.
Meanwhile, grinding operations for the first crop is expected to commence at the end of January, 2016.
It is understood that the GUYSUCO COI report into the sugar industry, complete with recommendations on the way forward for the industry, is in possession of Cabinet and was considered.
The report, when laid in parliament, will be considered by the Economic Services Committee.