Dear Editor,
The oft repeated adage that government must not involve itself in commercial ventures appears to be vindicated when one considers the parlous financial straits in which GuySuCo presently finds itself.
Former President Burnham nationalized the sugar industry and placed it under government control in the 1970s, and the deterioration began.
One of the policies of the Economic Recovery Programme of the Hoyte administration was that jobs should be given to those qualified to perform them. This policy saw the recruitment of Booker Tate in 1990 as the management team given virtual carte blanche to run our sugar company. It was a tremendous success; sugar production soared. In 1992, GuySuCo recorded a US$43million before tax profit.
Under the Jagan administration after 1992, this management system was continued, and the Booker Tate management contract renewed. By 1996, sugar production was 250,000 tonnes annually.
The industry continued to face problems. World prices dropped to such an extent that Barbados, St Kitts, St Lucia and other Caribbean territories ceased sugar production for export and diversified. But in Guyana, it was not politically wise to follow this trend. GuySuCo employed more than 25,000 people, most of them government supporters.
The government’s answer was to invest heavily in the industry, building the Skeldon plant at a cost to taxpayers of US$180 million, and promising that the plant would not only make more sugar at better quality and more cheaply, but would also use byproducts to generate electricity. Miracle upon miracle. Many sugar factories along the coast were closed down in anticipation of the great event since the Skeldon factory was expected to accommodate cane cultivation from all those locations.
The Skeldon factory has been a failure. The quality of sugar produced has been poor. The factory has repeatedly broken down. GuySuCo has found it difficult to supply enough cane to meet the optimum efficiency of the factory, and no one seemed to anticipate the logistical problems in ferrying cane from diverse locations to a single receiving point. There has been no mention recently of electricity generation by the factory.
The government also fired the Booker Tate management unceremoniously in 2010, and was heavily criticized by the opposition when it installed onto the GuySuCo board individuals who were seen by the opposition as party sympathizers rather than competent professionals. Booker Tate instituted litigation for breach of contract, and was recently awarded damages by Persaud, J in the Commercial Court in the sum of $204 million. In 2014, sugar production was down to under 200,000 tonnes.
GuySuCo has been operating at a loss for years. It has become heavily indebted and heavily subsidized. It is believed that, in order to manage its cash flow without an all-out rout GuySuCo has had to sell large swathes of cane land to Central Housing to be developed in the government’s enormous housing drives. The purchase money has gone to meet ongoing expenses. If this is true, it is alarming. Any accountant or businessman will advise that a company cannot be viable if it meets its expenses by selling and disposing of its assets which are the sine qua non of its production. The perception is that GuySuCo has become a financial disaster. It is heavily indebted, and its income from operations does not justify its continued operations if financial prudence were the only concern.
I believe that voters are curious:
(1) What policies have been implemented (beside the Skeldon plant) to improve the state of the sugar industry in Guyana over the past 10 years?
(2) Have these policies been successful, and is the health of the sugar industry in Guyana where it should be? Is GuySuCo a viable financial institution, or on the verge of bankruptcy?
(3) If the sugar industry is failing, is this due to a failure of policies implemented during the past ten years?
(4) What is the plan for the future of the Skeldon plant? Can we expect it to work optimally at some point, even after ten years from its conception, or should it be put to one side and a Plan ‘B’ formulated?
(5) What plans do the political parties have to improve the state of sugar in Guyana? Is the plan to continue with sugar production for export or to diversify? If diversification is now seen to be necessary what plans are there for the employment of current GuySuCo employees?
(6) Should the more than 25,000 sugar workers employed by GuySuCo be worried?
Yours faithfully,
Timothy Jonas
