– union baulks at transfer of health, community services to state
With productivity pegged at a dismal 235,000 tonnes this year, the sugar industry’s turnaround plan envisages stepped up mechanization, transforming Enmore estate into an important hub, ending grinding at LBI, an ethanol plant and transferring health and community services to the state.
- Komal Chand
The plan suggests that the future viability of a cash-strapped and struggling GuySuCo is dependent on accelerated mechanization, noting that the rate of full mechanization is currently at 2 per cent, which is way below the targeted 11 per cent projected for this year. It cited rainfall as the reason why the mechanization rate was less than originally projected in the past, adding that very little conversion was done last year.
It said too that mechanization will reduce harvesting costs and the dependency on labour turnout. However, in converse, this will increase the corporation’s capital costs as more machinery will be required. In 2009, the plan projected total the land area to be converted to machine friendly layout as: Skeldon 507 hectares (ha); Albion 150 ha; Rose Hall 200 ha; Blairmont 100 ha; Enmore 731 ha and LBI 400 ha. However, it emphasized that acceleration will be a factor of weather conditions, capital and availability of manpower.
In April this year, the blueprint for success was submitted to Agriculture Minister Robert Persaud by GuySuCo’s Interim Board and a few of the objectives were publicly outlined, which included improvements in management, significant cost cutting measures and maximum productivity in the field to lift the country’s critical sugar industry out of a production slump. The blueprint focuses on the period 2009 to 2013, with performance extrapolated to 2018.
The Guyana Agricultural and General Worker’s Union (GAWU), which represents the interests of the majority of workers in the industry, generally supports the blueprint; particularly the decision to have one major grinding factory on the East Coast Demerara. GAWU President Komal Chand told Stabroek News when contacted yesterday that discussions are still ongoing on a number of strategies in the turnaround plan such as the move to close the LBI factory since this could have implications for workers. However, he said the union agrees with the increased mechanization because it benefits workers. He said workers welcome the introduction of machines to load the cane in the fields because “it can sometimes be a rough job, particularly when it rains and there is rough terrain”.
But the union has one major concern with the plan and according to Chand, if it is not resolved in favour of workers industrial action is likely. He said GAWU vehemently opposes the transfer of the health services to the state because of “the tremendous negative impact this would have”. He said workers in the industry oppose any move to have these services handed over to the government because of concerns that have been raised about the delivery of public healthcare services across the country.
“The union is still in discussion with the corporation and we hope this particular suggestion is never implemented. There are just too many people who will be affected. Both the union and the workers realize how problematic this proposal is and we strongly oppose it,” Chand added.
The turnaround plan projected that the Ministry of Health would take over the corporation’s health services at the end of this year. It said GuySuCo spends approximately $360 million annually on the provision of health services, which includes diagnostic centres at Ogle (Head Office) and Rose Hhall and 15 dispensaries countrywide (excluding the DeKinderen dispensary). The plan noted that medical services are provided to at least 4,000 retired persons, workers, their immediate family members, pensioners, and emergency cases in the community. Currently, it said, the medical service consists of 6 doctors, 12 medexes, 1 dispenser and 21 nurses/nurse aides.
It was pointed out in the plan that the provision of health services is a very downscaled operation from the previous levels in the 1980s and early 1990s, and that more downscaling has been done over the past four years. According to the plan, efforts are being made to negotiate the takeover of these services by the Ministry of Health because “the medical services are provided to a significant number of persons outside of the existing GuySuCo staff”. The plan disclosed that the corporation is currently engaged in the handover of the DeKinderen dispensary to the ministry. “These facilities can be integrated into the National Health System. Taking into consideration the expansion of the National Health System by the GoG, it will avoid duplication of services,” it added.
The plan also suggested that GuySuCo’s community centres be transferred to the state, stating that the corporation expends at least $90 million a year for the upkeep and operation of the centres. It said the centres are a social service to the communities, but that the corporation often becomes responsible for the events that are held on the grounds. It said too that the corporation bears the costs of provision of the building materials and any other services rendered at the events. Currently GuySuCo is negotiating to have the Ministry of Culture, Youth and Sport take over the centres and discussions have already begun to transfer the LBI community centre and ground to the ministry.
Capital investment
The plan pointed out that major capital investment is required and suggested that funding must be provided to increase production to 400,000 tonnes and beyond. “It was evident in 2008 that the corporation has lost the ability to cushion itself in times of low cash generation, exacerbated by the need to spend an extra US$16 million on the new Skeldon factory that was not provided for,” the plan said while noting that there is no realistic expectation of GuySuCo being able to be self-sufficient in cash terms in 2009. It stated that in the absence of the normal commercial option of borrowing for the medium term, the corporation “regrets that it has no alternative but to request a cash injection from its shareholder [government]”.
According to the plan, GuySuCo needs initial financial support for the capital investment programme to the tune of $11 billion and assistance in sourcing the external financing for the capital programme over the remaining years, 2010-2013. It pointed out that delays in executing capital projects will continue to have debilitating effects on the productivity and efficiency of operations, adding that the execution of the 2009 capital performance is already delayed.
Restructuring
After revisiting the 2004 strategic review, the plan proposed a reconfiguration of the East Demerara estates since the interim board considers it “financially prudent and strategically sensible”. It pointed to the loss of Diamond lands, adding that a one-factory scenario at Enmore with a grinding capacity of 135 tc.hr is suitable for the Enmore and remaining LBI lands. It revealed that grinding hours for LBI and Enmore have consistently been less than 125 hours/week since 2005, adding that high costs have been incurred over this period from grinding at two factories that are in proximity and well below their capacities. Consideration was therefore given to grinding the canes from Enmore and LBI estates at one factory (Enmore).
The plan said the interim board found that “at steady state financially there was a loss of 18,000 tonnes of sugar annually ($1.8 billion),” noting this was compensated by an operating savings of $2 billion annually from operating one slightly bigger factory than two small factories. “Therefore there is approximately a net cash inflow of $0.5 billion from 2012. Over the ten-year period to 2018 a net cash inflow of $5 billion is forecast,” the plan said while stressing that this move would not result in any redundancy of workers. According to the plan, the interim board chose Enmore because the Packaging Plant will be based there and there will be accelerated mechanization at that estate. It said that Enmore will therefore become a modern agricultural industrial complex.
Another key feature of the restructuring is the grouping of the eight estates into two regions – Demerara and Berbice excluding Skeldon. The Demerara region comprises Enmore, LBI, Uitvlugt and Wales, while the Berbice region comprises Albion, Rose Hall and Blairmont. Each region is headed by a Regional Director, reporting to a Deputy Chief Executive Officer (DCEO), with the Estate Manager reporting directing to the Regional Directors. The Agriculture and Factory Managers will report to the Estate Manager while Skeldon will continue to operate independently with the General Manager reporting to the DCEO.
Ethanol plant
The plan said that an ethanol plant is expected to be commissioned by 2012 and it recommended that government assist the corporation with securing an investor. It was noted that GuySuCo’s June 2008 Business plan projected an Ethanol Plant/Distillery, constructed during 2009 and operational by 2010. The plant was expected to produce 13.2 million litres of ethanol or alcohol with full capacity achieved in 2014, requiring just about 50,000 tonnes of molasses feedstock. According to the turnaround plan, since production estimates are now lower than projected in the previous business plan (2008-2016), the operational year for the plant will be pushed back to 2012.
Further, the plan said, the proposal of building a refinery by 2015 is on the back-burner due to “current economic assumptions”. It also called for a review of this project based on an updated feasibility study.