On Tuesday via a joint statement from GuySuCo and the Guyana Manufacturing and Services Association it was revealed that the sugar corporation has taken a decision to acquire a plant that would produce around 55,000 tonnes of white sugar per annum which would satisfy the needs of beverage producers here, other consumers of the refined sweetener and also regional demand. The corporation’s plans were also transmitted the following day to the sugar union, GAWU.
The joint statement was the first inkling the public had of the plans and that the “Company has already sent out a request for tenders for a processing plant to produce white sugar of the required quality and colour with a target of early 2022 for first production…”
Over the last four and a half years, GuySuCo – minus 7,000 of its workers who have been made redundant – has struggled to right-size the industry amid lack of financing, poor production and market woes. The intention to acquire a plant to produce plantation white sugar represents a major step forward even if belatedly. However, a note of caution has to be introduced.
The US$200m Skeldon Sugar Modernisation Project which was pioneered under former President Jagdeo was an unmitigated disaster which eventually led to the decision by this government to shut down the entire estate as severe losses were being incurred, the cost of production was astronomic and the rated sugar output was not achievable. Loans associated with this project still have to be paid off.
The signal lesson to be learnt from the Skeldon disaster was that prudent and well-tested decisions have to be made. The builder of the Skeldon factory was the Chinese company CNTIC which did not have the requisite experience. For a project of this scale and scope, the very best operators needed to be engaged. Had that been done there was a prospect that the Skeldon estate could still have been in business today. The expenditure on the Skeldon facility also drained the corporation of working capital. This prevented much needed rehabilitation of the other factories, maintenance of fields to ensure higher productivity and yields and investment in other areas. A project which was meant to be the saviour of the industry quickly became an albatross that it never recovered from and demoralised the work force.
This is exactly why GuySuCo must be exceedingly careful in its due diligence for this project. It is unclear what the cost of this plant will be and how it is to be financed. Given GuySuCo’s dire financial condition and its severe indebtedness, debt financing will obviously have to be employed for this. The cost of such financing will have to be weighed carefully against the long-term sales prospects for the plantation sugar intended to be produced given the international movement against refined sugars and the fickle nature of the CARICOM market which is expected to provide a preferential opening for the sugar produced here. Presumably a careful study of the likely market opportunities has been done.
If the project moves ahead, as it seems likely, since GuySuCo says it is already scouting for interested suppliers of a processing plant there must be well constructed terms of reference and punctilious examination of the credentials of the applicants. This must all be done transparently. It is a pity that vital sectoral committees of Parliament are not functioning as the Economic Services Committee would have been expected to take careful notice of this matter.
An even more nettlesome problem for GuySuCo and the country would be to ensure that CARICOM partners live up to commitments to purchase the white sugar produced by Guyana and Belize. The history of CARICOM and its trade committee, COTED, is littered with numerous examples over the years of countries seeking the suspension of the Common External Tariff (CET) without good cause in many areas including the importation of sugar.
Concerns about the uptake of plantation white sugar and the maintenance of the CET on refined sugar were to have been key issues at the COTED meeting in Georgetown last Monday and Tuesday. There has still been no word on the outcome of this meeting. Both GuySuCo and the Guyana Government will have to ensure that there are iron-clad guarantees about the uptake in CARICOM of regionally produced white sugar.