Jan 04, 2016 News
– Country’s GDP, drainage and irrigation at stake
Leader of the Opposition, Bharrat Jagdeo has warned that his party will oppose any moves to privatize the sugar industry.
On Wednesday last, the Commission of Inquiry (COI) report into the Guyana Sugar Corporation (GuySuCo) was laid in Parliament. One of the report’s recommendations was to have GuySuCo sold to private buyers, even indicating that such buyers were already identified.
But, during a recent press conference, Jagdeo, a former President of Guyana, referenced the fact that, should the industry come to a halt, it would have a systematic impact on the entire country.
“We will vigorously oppose any plans to dismantle GuySuCo,” he said. “This is a sector that has a major systematic impact. There are few sectors in the country that have (such) a system wide impact.”
According to Jagdeo, this impact encompasses not just the thousands of people who are involved in the sector and the country’s employment figures, but also Guyana’s Gross Domestic Product (GDP) and foreign currency earnings.
He stated that too much, including the country’s drainage system was at stake for GuySuCo to be entrusted into private hands.
“If GuySuCo was not there, the entire drainage system along the East Coast (of Demerara) and the country (would be compromised). The maintenance costs will have to come to the Government to drain those lands.”
GuySuCo has been a major facilitator of drainage and irrigation services for its own crops. But, by extension, the corporation’s services benefit other agriculture enterprises and residential communities.
Last year, Dr. Clive Thomas, who is the Chairman of GuySuCo, had posited that commercialization of GuySuCo’s drainage and irrigation facilities could provide much needed revenue for the deeply indebted corporation. As of December 23rd, 2015, GuySuCo’s debt stood at some $78.6B.
“It would be a huge (fiscal) bill to do that,” Jagdeo continued. “GuySuCo provides a service to the villages sometimes that is not quantified. So (what) if we transfer GuySuCo to private hands, (and) after one year, they don’t make money and they shut down?”
The former Head of State expressed his worry that any potential private owners of GuySuCo would do just that, “as in private enterprise, sustaining an investment is determined by profits and not philanthropy.”
Over the years, GuySuCo has been under fire for producing sugar at double the cost it was being sold for. One specific area of expense has been the significant amount of cane, at one time over 20 tonnes, needed to be grinded before one tonne of sugar can be produced.
The COI report had found that the best thing for the government to do, now that GuySuCo is at a “point of no return”, is to sell. It was even reported that there have already been expressions of interest.
“Based on both the financial and economic analyses, the only rational conclusion which can be drawn is that which the COI had arrived at by consensus. The Government needs to decide urgently whether it can afford to continue, repeatedly, funding GuySuCo from the National Budget (via bailouts) in order to remain as a producer of raw bulk sugar for export.”
The report had also said that “to repeat such bailouts and expect different vastly improved results from GuySuCo would be irrational.”
According to the COI, in light of this, GuySuCo remaining state-run in its present form/structure is “strategically unacceptable”. Further, it was stated that it would be an inefficient financial and economic decision if the government chooses to hold on to GuySuCo.
“A decisive shift to private ownership and control of the assets now employed in sugar production has to be an essential element of any long-term resolution of the present paradoxical situation.”
By consensus, it has been recommended that GuySuCo be sold as soon as possible.
The report stated, “The process should start as early as practicable and aim to be completed within three years.”
The COI recommended that the State should divest itself of all assets, activities and operations currently associated with GuySuCo. Nevertheless, it did recommend another bailout.
“Financial support in the short term will be needed and this should be provided by the government in a timely basis.”
“In the interval, as the privatization process 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 any projects which will demand limited funds.”
“This,” the report had said, “is aimed at making the estates more saleable and attractive to investors, local and foreign. A few expressions of interest both formal and informal have been received.”
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