The Guyana Sugar Corporation (GuySuCo) requires an additional $1.6 billion up to the end of this year for capital and operational investments to stay afloat as revenue generated from its sale of sugar and molasses will be insufficient to meet the corporation’s financial needs.
The poor financial standing of the sugar corporation has already negatively impacted the first crop of 2021, Agriculture Minister Zulfikar Mustapha informed yesterday during a virtual press conference.
GuySuCo remains in a financial crisis as the corporation has once again found itself in a position of not being able to pay staff.
According to Mustapha, “The Corporation will not be in a position to pay wages from the week ending 21st August. Under the previous administration, a request was made to NICIL (National Industrial and Commercial Investments Limited) for an amount of $1 billion but only $550 million was received to date.”
For the past four months GuySuCo has been struggling to survive and has been dependent on external funding to meet its payroll obligations. In May, the corporation had made a request to the then-administration for $1 billion to meet payroll and operational expenses
Mustapha emphasised that GuySuCo’s three operating factories are in dire need of capital investments which has resulted in frequent downtime. He noted that the Uitvlugt Estate has been severely affected by mechanical issues.
“(The) Capital programme suffered from a lack of funding and will result in future crops being adversely affected. For this year from a budget of G$3.24 billion, the Corporation could only expend $82 million due to external funding not being made available,” he said.
Due to the lack of funding, the recently sworn-in Minister stressed that the First Crop for 2021 will continue to be weak due to low achievement of tillage and replanting targets thus far for this year.
“Achieving consistent and adequate cane supply is a problem across the industry… There is a shortage of essential inputs like fertilizers and chemicals which are vital to canes in the second crop and unless they are procured, cane growth will be adversely affected [which will] directly impact future production,” he noted.
Nonetheless, Mustapha vowed that under the PPP/C administration they will work to revamp the sugar industry and “return prosperity to those sugar workers who were sacked by the previous administration.”
Asked if his ministry has been able to ascertain how much money will be required to bring GuySuCo to a profitable state, he responded in the negative and noted that a study will have to be done.
He stressed that they will have to examine the $30 billion bond agreement between NICIL and GuySuCo. He noted that with the deal being shrouded in secrecy they will have to go through the particulars as even the Board of Directors is not aware of how much money has been raised via the bond and what are the payment terms.
“NICIL is disbursing funds to GuySuCo but they are not telling GuySuCo how much money has been drawn down from the $30 billion and they are not telling GuySuCo about the terms of repayment. If it is GuySuCo money, then they have to know about it,” the minister declared.
He argued that the APNU+AFC government, through NICIL, undertook a loan of $30 billion under the guise of assisting the corporation. To date, only $10.2 billion has been made available to GuySuCo and the Corporation has a total liability of approximately $9.5 billion.
Timeframe
Touching on his government’s campaign promise to reopen the sugar estates, Mustapha said that there has been no discussion on the timeframe for the reopening of the closed sugar estates. While assuring that reopening the Enmore, Skeldon and Rose Hall sugar estates remains a priority, he stated that they will have to undertake an assessment to determine the way forward.
The Agriculture Minister noted further that the assets of these estates have been placed in the custody of NICIL and they will first have to return them to GuySuCo. He stated too that from his understanding, parts of machinery from some estates have been moved and they will have to determine what needs to be replaced at the estates.
“Those measures will be taken shortly and hopefully then we will know when we will be able to start this survey,” Mustapha said while noting that he plans to hold discussion on this at the next cabinet meeting.
GuySuCo recorded a shortfall of 9,461 tonnes in production for the First Crop of 2020 from a target of 46,476 tonnes. Only 37,015 tonnes of sugar were produced.
The Second Crop for 2020 began during the week of August 7. Albion/Port Mourant Estate started grinding on July 31, while the factories at Blairmont and Uitvlugt estates would have started operations by August 4. A release from GuySuCo said that the budgeted target for the Second Crop is 69,480 tonnes of sugar. Operations at Albion and Blairmont will extend over seventeen weeks while Uitvlugt’s is projected to extend for ten weeks.
During the Second Crop, the release said that the Corporation will be shipping bulk sugar to markets in the Caribbean, North America and Europe, while both bulk and direct consumption sugars will be sold on the local market.
Immediate Past President David Granger was written to by Chairman of the Board of Directors for GuySuCo, John Dow, on the corporation’s financial dilemma.
In May, Dow appealed to Granger “… to use your good offices to arrange for funding to prevent the impending closure of the industry.” In the letter, he also said that GuySuCo needed funds to be able to survive after the second week of June, 2020.
Dow had told the then President that the current estates – Albion, Blairmont and Uitvlugt – in 2015 were in dire need of upgrades and that considerable sums of money were required to fix the deteriorated infrastructure in the field, in particular, bridges, dams, revetment repairs, and to provide for replacement equipment in field tractors, drain-digging equipment etc and factory pumps, motors etc. He explained that considerable sums were, and still are, required as a result of the neglect to provide the routine capital required for many years prior to 2015.
The APNU+AFC administration, which assumed office in 2015, was heavily criticised for its handling of the industry. Similar criticisms were faced by their predecessors, the PPP/C.
