The Committee of Supply of Parliament yesterday heard that the Guyana Sugar Corporation (GuySuCo) has exhausted the $30 billion bond financing which was secured for the diversification and mechanization of the industry back in 2018.
The syndicated bond was secured from a group of local and regional banks and was being overseen by the National Industrial and Commercial Investments Limited (NICIL).
During consideration of the 2022 estimates, the Committee of Supply questioned the $2 billion allocation for GuySuCo under the Ministry of Agriculture with subject Minister Zulfikar Mustapha explaining that $251 million has been allocated for fuel, $40 million for fuel, $282 million for other essential materials, $144 million for lorry contractors and $1.283B going towards wages and salaries.
In total, the sugar corporation is receiving $6 billion from the 2022 budget to offset its expenses.
“Over the years I have been mentioning and talking about the industry in terms of moving it forward and we knew for a fact that when we took over this industry it was crippling, the estates were limping. The $4 billion would be going to the agriculture sector to enhance the field and factories,” Mustapha told the committee.
“When we took over the factories (in August 2020) they were limping (at) about 40% and the extraction rate was very low in terms of juice and that is why even though you have good sucrose content in the cane, the extraction rate was very poor and that is why you haven’t had maximum production. What we have been doing over the last few months 18 months we have embarked on critical capital support for GuySuCo,” he added.
The minister further explained that once the 2022 budget is approved by the National Assembly and the bill is assented to by the President, then GuySuCo’s work programme for the year kicks in. The projects include repairs to transport infrastructure, land conversion for cultivation and enhancing machinery and equipment for better productivity.
Questioned about the monies from the bond and how it is aiding in the diversification of the operating estates, Mustapha told the Committee of Supply that when the PPP/C took office in August 2020, it met a balance of $3.8 billion and that has already been exhausted.
“That money started to use under the previous government, the $30 billion bond and it is GuySuCo that has to pay back and that is why the bond has been exhausted and that is why government is forced to give subsidies to continue in the investment of GuySuCo,” he said in response to questions from APNU+AFC MP Tabitha Sarabo-Halley.
Further pressed for information as to how the monies were expended, the Agriculture Minister said that while he cannot give an account for the spending under the APNU+AFC government, the monies his government met in the account were spent on doing “some work within GuySuCo”.
He added that the government is now being forced to subsidize the corporation’s operation since that money was exhausted. He promised to lay over a detailed explanation of how the monies were expended to the House.
Reopening and breaking even
After taking office in 2015, the David Granger-led administration closed the Wales, Enmore, Rose Hall and Skeldon estates between 2016 and 2017. This resulted in more than 5,000 sugar workers being terminated without opportunities for alternative employment. The PPP/C rode the promise of reopening those estates to the seat of power at the 2020 polls and since taking office, it has been investing billions of dollars in achieving that promise.
When questioned about the timeline for the reopening of the closed estates, Mustapha explained to the committee while he cannot attribute a specific time, the government is aiming for a 2022 reopening of the Rose Hall estate.
“It is a work in progress. We can’t say when but we are preparing the reopening of Rose Hall estate. There is a lot of work to do. Right now the management is embarking and improving cultivation. When we took over last year, the cultivation was abandoned with bushes all around. We had to do new tilling (and) had to have enough cane in the cultivation so that we can reopen. We had to rehabilitate the entire factory, make sure there are punts, rehabilitate the mill dock, rehabilitate the field equipment department and all those parts are a work in progress. I am very optimistic that we will reopen the estate and that will be done shortly,” he informed.
He further iterated that the reopening of the estates would be done in a phased manner and that government is working to ensure long-term sustainability of the estates. In terms of the Rose Hall estate, he explained that they are about 40% completed with the rehabilitation of the factory while the other components, mainly the fields, are being continuously rehabilitated and new canes planted to ensure maximum production once the factory is reopened.
Pressed on his commitment before the Parliamentary Economic Services Committee that GuySuCo would break even by 2026 and ultimately become profitable, Mustapha said that he is confident that would be achieved. He reiterated the government’s position that sugar is too big to fail and urged the committee to look beyond sugar and at the social and economic impact of the industry.
“So whatever it takes to bring back GuySuCo, the PPP government will ensure we make the resources available,” he said.
