GuySuCo’s Chief Executive Officer Paul Bhim on Wednesday said that the corporation is being hobbled by the failure of international suppliers to meet deadlines, which affects sugar production.
Speaking at a forum aimed at improving procurement and transparency in the Sugar Corporation, Bhim said that GuySuCo procures $11B in goods and services annually. The CEO told the gathering at the International Conference Centre that the Corporation’s biggest expenditure in this regard is on fuel, where approximately $2.4 billion is spent annually, and on fertilizer, which has an annual price tag of around $2.1 billion.
“One of the other problems we have been encountering of late is that a lot of the suppliers who have been actually tendering in GuySuCo come out of India and China. And it takes a long, long time for those goods to come in. It’s something I’ve been speaking to the procurement people about, to try and move away from that,” he said.
He noted that while procuring supplies from these territories may be cheaper at the time of procurement, the failure of the companies to deliver the items on time turns out to be more expensive for GuySuCo.
“But if they are going to be late consistently, then we’re going to end up spending more like [when] we had the problem during this off crop, where a lot of the milling plant spares were coming out of China and India.
They haven’t come in as yet, even though… they were cheap at the time the suppliers tendered,” Bhim, said. “What’s happened, they haven’t come in so we’re going to end up losing sugar, I think, during the second crop because of these spares arriving late,” he added.
Keith Burrowes, one of GuySuCo’s directors, called on the Corporation to be more proactive when it came to engaging suppliers, noting that at this point GuySuCo could not survive without credit.
Adding to what Burrowes said, Bhim noted that in recent years a lot of suppliers have been reluctant to extend credit to GuySuCo and consequently the company has to give these companies advances. “One of the problems we’ve been experiencing over the past four years, when our capital really started to get tight, is that more and more of our suppliers don’t want to give us credit,” he said. “We end up having to pay advances particularly to foreign suppliers, which can be significant… Now what invariably happens then is that these suppliers get the advances and they forget the supply, basically they are very, very late in delivering,” he added.
According to Bhim, GuySuCo is trying to move away from these suppliers since advances are also tying up much needed cash. “It is something the Materials Management Department (MMD) is working on,” he said.
“But it is a problem that we have and what we are trying to do is get back to the old days where GuySuCo was considered to be quite a reputable customer and we were granted credit overseas,” Bhim said.
He noted that some of the local suppliers have been extremely tolerant with the company.
The CEO said that over the past two years, the Corporation has done a good job in cutting expenses, noting that last year the company saved more than $400M.The previous year, the company saved even more money, he disclosed.
The forum was arranged by Burrowes, who noted that some of the GuySuCo’s procurement practices were outdated and needed to be revised.
According to him, the practices have not been enhanced to cater for various developments. Decisions made at the forum, he said, would be taken to the Board for ratification and approval before being implemented.
