– Hanoman says talks ongoing with govt, union
Chief Executive Officer of the Guyana Sugar Corpora-tion (GuySuCo) Errol Hanoman said the mechanism is yet to be worked out with government as regards the sale of the Diamond lands, but the aim is to sell despite strong objections from the union.
As pressing as the need is for a capital injection in the industry, Hanoman said, realistic expectations point to ongoing dialogue with the administration as well as the union. However, he emphasized that the talks with the state are critical since these would determine how GuySuCo handles the disposal of the lands.
The sale of the Diamond lands was set out as a cost-cutting measure in the blueprint for the industry as outlined by the Interim Board. Hanoman told Stabroek News during a brief interview on Wednesday last that the suggestions in the plan are being implemented since it is part of the transformation of the industry. But the Guyana Agricultural and General Workers Union (GAWU) has issued strong objections to the sale of the lands, largely arguing that these are arable lands which the industry can ill-afford to lose.
President of GAWU, Komal Chand said the corporation is planning to sell “suitable land to rehabilitate retired land”, a decision which the union has trouble comprehending. He said GuySuCo’s track record in disposing of earmarked land is dismal, and underscored that the union is concerned about the slump in the market and whether “there is any taker out there with $34 billion to acquire this land”. The union has also raised concerns about the negotiations with government and has questioned whether a state acquisition of the lands would result in no compensation.
Hanoman said GuySuCo has no intention of moving ahead and disposing of the Diamond lands without a suitable formula in place. He said the dialogue with government “which is important” would lead to a structure as to how the process would unfold, the $34 billion expected to be netted from the sale is critical to the industry.
In acknowledging the cash-strapped position of the industry, Hanoman said capital inflows are important to GuySuCo. However, he said the situation would improve based on the pace at which the initiatives set out in the turnaround plan are implemented. He said too that GuySuCo realizes that the sale of the Diamond lands would not be immediate. Therefore, the industry would have to benefit from bridging support. Hanoman said also that Herdmanston House, which was among the assets earmarked for disposal at $130 million, has already been sold.
The turnaround plan for the industry said GuySuCo has lands at Diamond and in other locations that are “highly marketable”. It said the Diamond area has been transformed into a housing area, and noted that locations in the Berbice region in proximity to the Berbice bridge are now heavily in demand. “It is essential that the corporation be able to sell these lands at market rates,” the plan said, while pointing out that in the past GuySuCo has failed to benefit in any significant way from the sale of lands. It said land currently being recommended for sale “could have a significant impact on the corporation’s cash inflow as a consequence.”
Potentially, the plan said, the corporation could pocket in excess of $32 billion if the property and lands identified for sale are purchased. It stated that of this value, cash earnings of $3 billion have been included in 2010, with a profit on sale of land of $1.5 billion. In terms of what the industry could gain, the plan projected sales at Herdmanston house ($130 million); Ogle compound ($1.4 billion); Diamond lands at ($30.6 billion).
Further, it mentioned land at Ogle which is also to be sold. According to the turnaround plan, relocation of personnel from the Ogle compound to Enmore is expected to significantly reduce operating costs such as electricity, security and water treatment. It said too that the Ogle compound is prime real estate, adding that its sale could generate significant cash inflows. But when questioned about the Ogle lands Hanoman told Stabroek News that area is not on the immediate agenda.
Marginal lands
Chand insisted that the lands GuySuCo is seeking to rehabilitate are marginal lands, which he says have low productivity and pale in comparison to the Diamond lands which are to be sold. “We simply cannot see the rationale for closing the Diamond cultivation and spending money to rehabilitate land which you had retired,” he added. The union head said the suggestion by the Interim Board to sell off the land at Diamond may seem lucrative, but that a firm examination of the proposal would reveal that substantial capital is needed to restart cultivation at the lands which are no longer in use.
“Where is the money coming from to rehabilitate this land? The corporation is strapped for cash,” Chand said. He said GuySuCo ought to consider that the Diamond lands have good drainage in addition to being arable. Chand said too that GuySuCo has a poor track record as it relates to the sale of lands, an observation which he linked with factors outside the industry’s control. Still, he said the corporation has had trouble selling off land previously earmarked. He said while the union supports the turnaround plan, it is concerned with a few things which were included. He said the board went ahead and released a plan without any prior consultation with any of the related unions in the industry.