Chief Executive Officer of the Guyana Sugar Corporation, Dr Rajendra Singh met with senior management last week to expand on its three-year strategy but made no mention of the dire financial straits that the company was in, sources say.
He later blindsided many in management by subsequently revealing to the sugar unions that if financial assistance wasn’t received, operations of the ailing company would cease by Sunday coming.
The new APNU+AFC government is evaluating the current status of the corporation in light of Singh’s pronouncements to the unions.
Stabroek News was reliably informed that many company officials were not privy to the immediate and dire financial situation that was exposed by the Guyana Agricultural and General Workers Union (GAWU) and the National Association of Agricultural, Commercial and Industrial Employees (NAACIE) in a joint statement to the press on Monday. That statement urged immediate action by the government to prevent the shutting down of the industry.
This newspaper was told that in the meeting last week with GuySuCo management, the first crop figures were discussed by the CEO in detail along with the corporation’s three-year plan. Subsequent to that meeting, Singh, who was a candidate for the now opposition PPP/C in the May 11 general elections, met with the two sugar unions and explained that waged and salaried employees could not be paid after May 31, 2015.
Head of GAWU Komal Chand told Stabroek News yesterday that while he was made to understand that the government was also informed, newly appointed Agriculture Minister Noel Holder was not aware that the “situation was so grave.”
Chand said that “an immediate and urgent intervention is needed,” to ensure that the out-of-crop work is not stalled. He said immediate financial assistance from the government was necessary to stave off the severe repercussions should operations cease.
The GAWU head also noted that “this (crisis), it didn’t happen just now this have been a long time in the making.”
He said that “we know that the industry was operating on the basis of shipment of sugar and then receiving of payment”. Chand told Stabroek News that GuySuCo was reliant on money coming in “week by week.”
He said that the shipments were now finished and as a result payments were not coming in. He noted that the US$15M loan from National Commercial Bank of Jamaica was being used to finance wages and operational costs. The loan agreement was for one year and GuySuCo was supposed to pay it back in full in 2015. The status of the repayment is unclear.
GuySuCo recently revealed that the first crop saw 81,194 tonnes of sugar produced which missed the modest 86,201 target by 5007 tonnes.
Chand noted that the out-of-crop season was when the factories and field husbandry were assessed and given the neglect due to financial constraints in the past, further abandonment could not be allowed.
According to one source, many were surprised that the corporation did not raise the issue earlier as the CEO would have known that the financial crisis was imminent. During the CEO’s meeting with staff the possibility of an industry shutdown was not brought up.
The source told Stabroek News that GuySuCo was forced to disclose the extent of the financial calamity because the politically controlled state-owned corporation could not now rely on a bailout with the change in government. The source said that many within the corporation were not expecting the People’s Progressive Party/Civic, which has kept a tight grip on the corporation, to lose the May 11, General and Regional Elections and as a result the current state of its finances had not been exposed earlier.
For several years, critics had said that the corporation was severely in debt and not viable in its current configuration. It has not presented annual reports on a timely basis for full vetting of its status.
Another source told Stabroek News that the CEO provided to the new Agriculture Minister paperwork on the current state of sales while adding that “GuySuCo is too big to fail”. He noted that the government would need to intervene immediately and the corporation was already expecting a bailout as the lives of 16,000 workers, their families and all of the indirect businesses associated with the state- owned corporation would drastically be affected.
Meanwhile, Finance Minister Winston Jordan could only say yesterday that any talk of a bailout for the corporation was “under consideration.”
Last year, a $6B subvention was approved in the budget to assist the ailing sugar industry. The political opposition at the time had stated that the approval of the subvention was based on ensuring that enhanced competence and less politicisation of the board and the management was achieved. Since then, former PPP/C minister Shaik Baksh was appointed Chairman of the Board in a move that was criticised as rewarding PPP-aligned persons with high level positions.
The Chairman of the Board told Stabroek News that he would not be commenting on whether or not the board was privy to the situation and of a possible industry shutdown by the end of the week.
Former Agriculture Minister Dr Leslie Ramsammy when contacted said that the new government and the CEO would be the ones to determine what the way forward was.
As of June last year, GuySuCo’s debt was at a whopping $58B equivalent to 31.6% of the 2014 National Budget.
Stabroek News was unable to reach Singh for comment up to press time yesterday.
