Agriculture Minister Noel Holder says that the much anticipated Commission of Inquiry report on the sugar sector is in need of “tightening” as it currently lacks a full array of options and additional information will be requested of the commission.
Holder told Stabroek News last week, “…What we want is to get a stream showing with the new management in place what we have now and we see things are changing around with production. This is the benefit stream you are going to get next 10 to 15 years. In terms of income this is the expenditure to do with that, this is the net cash…now we can go this way which means we will show deficits for so many years and then positives after that… On the other hand you may say that you finance deficits for so many years and then you can look at privatising the industry and selling it or you can look at … partial privatisation…these are the things we want to get so cabinet has options.”
The minister said, “We aren’t fully satisfied that everything we want has come out clearly.”
The report was expected to be taken to Cabinet last Tuesday but the minister last week told Stabroek News that this was not to be the case as he had only received the report over the preceding weekend.
The much anticipated CoI report was to be completed within 92 days beginning from July 1, 2015. It was submitted several days past that deadline on October 17.
Previously, sources with knowledge of the report said that it advocates privatisation and bringing the estates into good working order and no recommendation was made to close any of the estates.
One source had told this newspaper that the recommendations focused heavily on agronomy and the need for human resource development.
Over the next two years there will need to be heavy emphasis on bringing the sugar fields up to standard with the aim of lowering production costs, the report posited. Stabroek News was told that simultaneously the reform in human resources could result in layoffs. Additional layoffs could be possible should the recommendations evolve into consolidating estates.
During the hearings held by the Commission of Inquiry it was revealed that none of the estates was turning a profit and the industry’s average cost of production was a whopping US$0.45 per pound of sugar.
Stabroek News was made to understand that Skeldon’s cost of production is in the range of US$0.50-US$0.55 per pound of sugar.
Skeldon7
Speaking specifically of the US$200 million Skeldon Estate, inclusive of the US$110 million Skeldon Factory, Holder said, “The issue with Skeldon is this thing the [previous] government did about selling the cogeneration plant and that is a big issue because we can’t do anything with Skeldon. We can’t make it profitable, we can’t sell it if that cogeneration plant is not part of the package because what you are doing is taking cheap bagasse from the estate giving it to another entity and then buying back power to run the estate at a very high price it makes no sense.”
While he spoke of the urgency to reacquire the Skeldon Cogeneration Plant, which was sold under the PPP/C government to Skeldon Energy Inc, a state-owned Special Interest Company created just to buy the plant for US$30 million, the minister was unsure as to when this would be done.
Holder said the Guyana Power and Light Inc is yet to complete the payment to GuySuCo for the sale of the plant.
Chairman of the Guyana Sugar Corporation and a commissioner on the CoI, Dr Clive Thomas had told Stabroek News that he believed the Skeldon Estate was a special case.
Stabroek News had asked the economist for his take on possibly moving toward decommissioning the Skeldon factory in the hopes of bringing down production costs considering sugar sells for US$0.16 per pound.
The average world market price is even lower than this.
“You are pressing me hard on what we are going to do with Skeldon, but that will be a decision of the COI, but from my point of view personally and as chairman that is a outlier and has to be dealt with specially,” Dr Thomas had told Stabroek News.
The Skeldon factory’s grinding and output are far below its rated capacity and it has already seen a lot of expensive rehabilitation work even though it was only commissioned in 2008. Its ratio of tonnes of cane per tonne of sugar has also been unsatisfactory.
