Nov 11, 2016 News
By Kiana Wilburg
As currently structured, the Guyana Sugar Corporation (GuySuCo) cannot be sustained. If the status
quo remains, subsidies exceeding $18B and $20B would be required in the next two years and thereafter. In short, GuySuCo’s board members have come to terms with the reality that the price to turn sugar around is too high. A high level team has since communicated this to Cabinet. During that meeting, members of government were told that even if all the capital was to be provided for the state entity, GuySuCo would remain a significant loss maker. The estimated operating losses would be more than $10B annually.
In the circumstances, two Government Ministers told Kaieteur News that based on presentations made by GuySuCo officials, funds injected into the sugar industry would be wasted, if such injection is made in the absence of any plans for restructuring and diversification.
The Government officials agreed that radical reorganization and diversification are urgently needed.
Recently, GuySuCo Chairman, Dr. Clive Thomas, said that the assets of the industry are “rundown”. He noted that factories, agricultural fleet and field infrastructure were all inherited in a terrible state.
GuySuCo Board members said that compounding the issue is the fact that the sugar management and technical support are weak and inexperienced.
But one of the priority issues for the Chairman remains reducing the sector’s heavy reliance on bailouts. Dr. Thomas said that the entity hopes to do this through diversification.
“What we are projecting is that we would use some funds to pursue the diversification of the industry. We see bailouts rising for about two to three years and then falling dramatically by 2020.The bailouts, or need for it, can fall by 2020. We hope to pursue diversification of some of the estates, one of which includes Wales.”
Lending much credence to the Chairman’s position was Anthony Vieira. Vieira who once served as a GuySuCo Board member has been appointed head of the state entity’s Diversification Unit.
Vieira agreed that diversification of the sugar industry can bring an end to the sector’s reliance on billion-dollar
bailouts. He said that the Unit is currently in the process of coordinating a diversification process with regard to aquaculture and the cultivation of rice.
Vieira said that the Unit is awaiting a USA study on the feasibility of GuySuCo’s proposed aquaculture venture.
“For the time being, I can say that the people conducting the study believe that this is a very feasible project, and that aquaculture can be many times more profitable than growing cane,” Vieira added
DIVEST AND DIVERSIFY
A number of options on the way forward for the sugar industry were presented to Cabinet, recently.
Speaking on the discussions that occurred in this regard between Government and the team from GuySuCo was Minister of State, Joseph Harmon.
Harmon said that the officials presented a number of alternatives regarding the way forward with the sector. The Minister declined, however, to reveal what those “options” were.
The options up for consideration include privatization – as recommended in the Commission of Inquiry into GuySuCo – and the most extreme being the closure of the sector.
Another recommendation made to Cabinet was on the need to bring an end to the production of bulk sugar at the Skeldon Sugar Estate. Kaieteur News understands that the US$200 million factory is in dire need of costly repairs.
“If you only knew the cost to refurbish the factory, it would blow your mind,” the GuySuCo Chairman asserted.
“Skeldon needs to be divested. We thought it would have been saved or salvaged by a mechanization project and that was not helpful. Then to get the costs down to competitive levels, moves were made to involve private cane farmers in supplying cane to Skeldon. That, too, did not work. The reality before us is that the factory has lots of faults; it is badly designed and poorly constructed.”
Thomas added, “The factory is deteriorating. New steel is needed, some of the furnaces don’t work, some of the boilers don’t work…the factory is just not properly built. The cost for the repairs needed is about, if not over, US$60M ($12B). It is that big of a disaster.”
Just recently the sugar sector received a whopping $2B in assistance from the national purse. This financial support is to help meet routine expenditure, and is in relation to the second crop for the sector. The cost to repair Skeldon alone would be six times that bailout.
The amount needed to fix the problems facing Skeldon is also more than the $11B ploughed into the sugar industry for the entire year.
Government was also presented with the option to diversify Rose Hall /Providence and the East Demerara estates. It was noted that in addition to the Wales Estate, the estates at East Demerara and Rose Hall are underperforming and should be transitioned into diversification.
“We were told that those estates have prime agricultural lands, have access to the required facilities, and are strategically located for access to support services and trade,” said one official.
“We were also advised by GuySuCo officials that these advantages should be exploited in financially viable diversification ventures. They said that preparations should commence from January 1, 2017, so that the lands can be prepared for proposed diversification projects as the canes are harvested during 2017. The diversification plans are contingent on this decision.”
Aug 05, 2021By Zaheer Mohamed Kaieteur News – A courageous unbeaten eight-wicket stand of 65 between Deonarine Seegobin and Raydon Austin handed Mahdia/Movements Family a two-wicket victory over Laluni in...
Aug 05, 2021
Aug 05, 2021
Aug 05, 2021
Aug 05, 2021
Aug 05, 2021
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]