Nov 14, 2016 News
– proposes to Govt. that it be compensated by NDIA
By: Kiana Wilburg
The Guyana Sugar Corporation (GuySuCo) expends over $600M a year on drainage and irrigation services provided to various communities.
But top officials within the state-owned entity have proposed to Government that it be compensated for these works by the National Drainage and Irrigation Authority (NDIA).
According to GuySuCo Board members, the recovery of drainage and irrigation charges from NDIA is just one of the many options currently being looked at so that the loss making company can draw in more funds to service daily expenses.
“From the inception, GuySuCo has assisted with the drainage and irrigation of surrounding communities which accounts for approximately 40 percent of the company’s annual drainage and irrigation costs,” an official said.
“These costs should be recovered from NDIA.”
According to Chief Executive Officer Errol Hanoman, the communities provided with the services are within proximity of sugar estates.
“The communities are from Skeldon to Uitvlugt. And from since the time GuySuCo has been doing this, it has never been reimbursed. It is currently counted as part of the entity’s operating costs. We believe that the competent bodies should pay us for these services.
“Based on our calculations, these services cost GuySuCo over $600M annually. So it is one of those options we have on the table at the moment before the Government.”
As presently structured, GuySuCo cannot be sustained. In fact, if the status quo remains, subsidies exceeding $18B and $20B would be required in the next two years and continuing thereafter.
GuySuCo 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 have 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 the restructuring and diversification of the industry.
The Government officials agreed that radical reorganization and diversification are urgently needed in the sugar industry.
GuySuCo Chairman, Dr. Clive Thomas said that the assets of the industry are “run down”. In this regard, he noted that factories, agricultural fleets and field infrastructure were all inherited in a terrible state. GuySuCo Board members said that compounding the issue is the fact that sugar’s 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 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. In this regard, 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.
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