After several requests for financing from government to meet its payroll obligations, Cabinet on Friday sanctioned a disbursement of $600M from the National Industrial and Commercial Investments Limited (NICIL) to the Guyana Sugar Corporation (GuySuCo), Agriculture Minister Zulfikar Mustapha says.
Mustapha last night told Stabroek News that the $600M will be sourced from the $30B bond that had been secured for the industry by NICIL.
According to the Minister, GuySuCo’s management had requested the sum which they said would cover their payroll for the remainder of the 2020 fiscal year.
“I had met with GuySuCo and they requested $600M for wages and salaries saying that it would carry them for rest of the year… So it was sanctioned by Cabinet on Friday that the money be taken out from the bond,” Mustapha told this newspaper.
The Agriculture Minister added that the sugar producer requested additional sums to fund capital works on the three operating estates but he asked that they revise the plan to include the revival of estates shuttered by the past APNU+AFC administration. He explained the rationale behind his request to the corporation emphasizing that his government will hold to its manifesto commitment to reopen the shuttered estates thus providing jobs for many who were retrenched.
Mustapha will this week again meet with corporation executives to discuss the way forward and to take proposals to his government for analysis on what budgetary commitments could be met in both the short and long term.
He said that he remains optimistic that a revival plan could be devised and that the sector could once again be placed on a sound footing.
At his first press conference held earlier this month, Mustapha had announced that the corporation required $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, the minister had said.
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 during his virtual press conference 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 Cor-poration could only expend $82 million due to external funding not being made available,” he said.
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 Presi-dent 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.
