Leader of the Opposition, Bharrat Jagdeo yesterday called on the APNU+AFC government to consider transforming large sums of sugar debt into equity to get the Guyana Sugar Corporation (GuySuCo) on a better footing.
“The debt of the company…it could be reduced easily by $5B because that is owed to the [Guyana Revenue Agency], GRA short term debt and of the $62B in long term debt, over $33B is owed to the government…you can easily convert it to, and this is for the co-gen (plant) and other things, it is owed to the government so that tomorrow (it) could be off the books. We can covert this into equity so if you go through the short term debt and the long term debt you will see that although it is carried on the books and it looks great that they are not required to service a lot of these things because the government … has not gone after them for not servicing the debts,” he told reporters during a press briefing at Freedom House yesterday.
Government on Monday announced that the Wales Sugar Estate is to be closed by yearend, the first major decision it has taken on the troubled industry. According to a statement from the Ministry of Agriculture, the Wales estate is projected to operate at a loss of between $1.6B and $1.9B this year. With immediate effect, there will be no further land preparation and planting. As the estate’s cultivation is reaped, the land would be retired and kept for diversification ventures.
Jagdeo has called on government to reverse its decision to close the estate saying that the move would affect the livelihood of many residents. Government, however, has said the Wales operation was not feasible and plans are in the pipeline to cushion the impact of its closure.
“When we talk about debt and what is on the books, we need to have a background to this issue. Many commentators including some that I don’t agree with went to the Commission of Inquiry and they asked that an economic rate of return be pursued so that the CoI would do an economic rate of return because if you do only a financial rate of return, you cannot capture the multiple benefits of GuySuCo. Community benefits, [Drainage and Irrigation] D&I benefits, other services that they provide to the nation…monetize the other costs. That way you can see GuySuCo’s position, its true impact on the nation. We did not have it done but that would allow the country to make a decision how valuable GuySuCo is because it is not just the profit and loss statement you have to look at,” Jagdeo asserted.
The opposition leader also mentioned utilising a US$50 million Line of Credit (LoC) from India but was not clear about what he meant and former President Donald Ramotar later clarified that he had preliminary talks about a loan for the sugar industry while in India last year but no sum was mentioned.
“Every year, we put some money into sugar, there is a reality that much of the things that we have to do in the sugar industry can’t necessarily come from the budget itself but we were exploring for example, the rehabilitation of all of the estates through a Line of Credit from India. The same Line of Credit that is there that they have decided to use for other purposes, but we had a $50M Line of Credit that we started exploring the possibility of using those to fix up the other factories…you had to get external help to do all of this,” Jagdeo had said.
It is not clear what Jagdeo meant when he referred to “the same Line of Credit that is there that they have decided to use for other purposes.” The only LoC in this sum was announced in January last year during Ramotar’s trip to India when it was announced that India would grant a LoC of US$50 million to Guyana for the East Bank Demerara-East Coast Road Link Project.
According to Jagdeo, the intention was, among other value-added measures, to build co-generating plants across the estates. “Tomorrow this government can raise, we can work with them to raise US$50M for the rehabilitation of these factories,” Jagdeo pronounced.
When contacted, Ramotar said he had raised the matter with India’s Prime Minister Narendra Modi during his trip there last year. “It wouldn’t be right for me to tell you that we had an agreement but I strongly detected a willingness when I was in India,” he said, when questioned about the US$50M mentioned by Jagdeo.
“I had raised it with Prime Minister Modi when we met…we had discussed with Indian officials when I was in India about them helping to recapitalise the sugar industry. In principle we had an agreement with them, but no amount was discussed,” he said.
Asked specifically about the US$50M figure, Ramotar said this was not an unusual sum of money that would be floated especially given the fact that he had met with the heads of various sugar companies on his India trip. He said the details were to be worked out with the assistance of technical persons but nothing had been finalised nor was that state of action reached.
He subsequently called Stabroek News to say that he wanted to strengthen his previous statement and said “we had a commitment.”
Impacted
Meantime, when asked about the PPP’s strategy to alleviate the concerns of the over 1,600 sugar workers who will be directly impacted by the closure of the Wales estate, Jagdeo said the opposition would first need to speak with government. Officials from GuySuCo met with workers on Monday and with the two sugar unions, GAWU and NAACIE yesterday but Stabroek News understands that there has been no direct contact between the opposition and government for an official meeting.
“We should try to talk to the government first and then if it does not, I want to give the government at this point in time the benefit of the doubt that they did not think through this issue enough, that this was a decision made hastily at the board level and that the Cabinet did not, I want to give them that view that the Cabinet did not support this or does not support this. If that is the answer, if they say no this was not a Cabinet decision and we don’t support this, then the issue goes away. If they pursue, continue to pursue that line we will attempt to talk to them in Parliament, we are hoping to have a debate on the issue and that everything will be stalled pending that debate, and the issue and we are hoping to convince them in the legislative arm of the government or the State to reverse this decision by pointing out that it runs contrary to their own report and it doesn’t make economic sense not just financial, but economical,” Jagdeo said.
When asked for a more specific plan given his visit to Wales a day prior, Jagdeo said: “there has to be a more tangible expression of disagreement and that involved people protesting and we will be prepared to join them in protest.” There were no reports of any protests since the announcement of the closure of the estate.
The former president spoke extensively of the impact the closure will have on the community. He read from the CoI report and said government was seemingly making decisions without consulting the report after placing such heavy emphasis on its details.
According to Jagdeo, private cane farmers sell roughly $800M directly to GuySuCo contributing to the local economy. Jagdeo said it would not be possible for the opposition to do any form of disaggregation but government needs to look at the overall impact on the area. He criticised the government for lacking an action plan as it relates to employment and economic stimulation once the estate is closed.
Jagdeo also lauded GuySuCo’s contributions to the country and said: “right now this government has moved away from the CoI report, it has rubbished this entire report.”
