The Guyana Sugar Cor-poration (GuySuCo) is effectively bankrupt and its total debt stood at $82 billion at the end of July, according to Chairman of the Board Dr Clive Thomas.
Thomas told Stabroek News that the $82 billion figure was given to him by GuySuCo’s interim management. The figure has risen by $24 billion from the disclosure made before the National Assembly’s Economic Services Com-mittee last July, when then Director of Finance Paul Bhim said the total debt was $58 billion.
Thomas also stated that he has proposed to the government that the interim management, which was installed after the dismissal of former Chief Executive Officer Raj Singh in June, stay on until 2017.
“If I were the government—but I am not the government so I cannot say that—but I would leave the management team in place for the next two years,” he said.
“I personally would like it to be in place until the end of the export agreement we have with the European Union and Tate and Lyle to sell them raw sugar. So, that takes us to the end of 2017,” he said.
Thomas also said the interim management should remain because the findings and recommendations of the Commission of Inquiry into the sugar industry, which are currently being prepared, will see an extremely different industry from what exists now.
“I would not expect, from my point of view, at the end of two years you would have a traditional GuySuCo left. You’re trying to transform the company,” he said.
Thomas noted that currently GuySuCo’s cost of production was in the hundreds of millions while the corporation was suffocating under its debt. “Operating costs are greater that their revenue. It is about 80% greater… It is making large losses each year,” he said, while noting that unsustainable nature of spending.
He added that the company was running on debt financing. “Some from earnings, some from debt. Mainly from debt that takes the form of either government debt bailout or overdrafts from the institutions we borrow from that we haven’t been paying, so it is not a sustainable situation. That is why I am saying the company is technically bankrupt. You can’t finance your capital structure that way and no one will want to finance it because you won’t make an income or any profit,” he said.
Thomas stated that labour accounts for two-thirds of total operating costs, which essentially means that the company is not only unable to service any of its debts with its earnings but also cannot cover its wages and salaries.
He said GuySuCo’s cost of production had to be brought down to 20 to 25 US cents per pound, which could be done simultaneously with the refining of white sugar that could then be sold for 30 to 40 US cents per pound.
Asked how the company was currently going to finance the much needed rehabilitation works of the various factories, Thomas said that given the current financial state of affairs, it would have to come from debt like much of the other financing.
“It is a lot of works, but we can probably sum it up into the capital needs and the capital needs going into hundreds of millions of dollars and I think what is happening so far is they only have 30% of what they requested and there is no likelihood of getting the rest because the government just doesn’t have it,” he further said.
Thomas did not disclose what the current short term debt is. Last July, it was pegged at $19.4 billion. Thomas revealed that the US$15 million loan that was acquired from the National Commercial Bank of Jamaica to cover the operating costs of the company has not been paid back. He indicated that changes were made to further modify the standing agreement with the Jamaican bank. “It is basically a loan for working capital, but we can only get loans if it has a government guarantee,” he said.
Under the initial terms of the loan, GuySuCo was to pay back the US$15 million within a year.
“Effectively GuySuCo is bankrupt, so nobody would lend to it and expect to get paid unless the government guarantees to pay them,” Thomas noted.
Speaking briefly of the ongoing rehabilitation works at the Skeldon factory, Thomas said he had not looked over the cost of the work by the South African firm Bosch Engineering. He did note that the former CEO’s claims that work at the factory was no more than $1.8 million was not possible.
“I have scant confidence in him and you can quote me on that,” Thomas said in relation to the former CEO and the figures he would have presented to the public.
Thomas said most of remedial works did not go as expected because there are still some issues that remain to be tended to. He did not reveal what these issues were but he said the associated costs were high.
