The Rose Hall sugar factory (SN file photo)
September 28 ,2020
While government is forging ahead with plans for the reopening of three of four shuttered sugar estates, it cannot solely sustain the sector and is calling on private investors to partner with it.
“We alone as a government cannot do it and that is why we are looking at the private sector to help sustain sugar,” Minister of Agriculture Zulfikar Mustapha told Stabroek News in an interview yesterday.
“It is a diversification strategy we are looking at. The Government of Guyana is the only shareholder of GuySuCo… eventually, the plan is to have private shareholders to ensure it is maintained and sustained,” he added.
Mustapha explained that the Guyana Sugar Corporation, will soon invite expressions of interest from the private sector to join with it as it works to resuscitate the beleaguered sugar sector.
“A joint venture, partnerships, or a leasing arrangement on the now re-opened vested sugar estates at Enmore, Rose Hall and Skeldon and also on the operational sugar estates at Uitvlugt, Blairmont and Albion,” are being sought, a notice inviting Expressions of Interest (EOI) states.
“One of the main features of GuySuCo is the six (6) cultivations of various sizes supported by six (6) sugar mills. The total size of the six cultivations is 45,018 hectares capable of producing 272,100 tonnes of sugar annually, which serve as the base stock to satisfy the demands of the 200,000 CARICOM white sugar market and there is also scope to package 30,000 tonnes of sugar annually, thereby adding value to the raw sugar. The Government of Guyana as the sole shareholders is supportive of this initiative to invite interests from the private sector to participate in different forms in the ownership or operations of GuySuCo,” it adds.
Mustapha recalled a meeting held last week with the Board of GuySuCo and said that he gave them a charge to dedicate their energies and fuse synergies to ensure that the sector is saved.
The first plan, he explained will be to rebuild the sector to breakeven status as additional mechanisms are put in place to ensure profit generation and increased employment rates.
“I told them that they were selected because of their experience and requisite skillsets to ensure the turnaround we are looking for. We have to first come to where we are breakeven, and do so swiftly and then build from there … Build from strength to strength. Sugar is important and spinoffs are tremendous in terms of benefits to this country and citizens,” he said.
“We as a government has already committed $5B, first starting with $3B then $2B. We are giving GuySuCo the push for its revitalization because we are confident that its potential can be realized with proper management. In the long-term we are looking for partnerships, for investors to come onboard. It is a work in progress and we are seeking to bring in partnerships that is why we are putting out this tender,” he added.
‘No black hole’
During the Budget 2020 debate and consideration of estimates, Mustapha was grilled on the sector with opposition Members of Parliament criticizing government’s reopening of estates it closed and on the $5B allocation.
“You are planning to reopen sugar estates that failed to have a competitive advantage when it comes to production cost. No plan is articulated in this Budget to ensure that we do it in a different way and it doesn’t become the black hole it was in the past,” APNU+AFC MP Cathy Hughes said.
In the Committee of Supply, APNU+AFC representative Jermaine Figueira had called on Mustapha to disclose the estimated cost of producing one ton of sugar but Mustapha had said it was not relevant.
“Three billion dollars is being allocated to GuySuCo and the public needs to know what is the production cost for GuySuCo to produce one ton, only one ton of sugar, in US dollars. We need to know. You are selling it on the world market. We need to know the comparative price,” he urged.
And as they discussed the capital expenditure for agriculture development and support services, Mustapha again came under fire when opposition Parliamentarian, Khemraj Ramjattan, questioned why there was no capital project profile for the $3 billion allocation.
“I did not see a capital project profile – 3 billion and no capital profile” Ramjattan stated. According to Mustapha, the $3 billion will be spent on the opening of the Rose Hall, Skeldon, and Enmore, sugar estates and the remainder of the monies will be used for the “re-capitalization” of the other estates.
Ramjattan in response reminded that budgeting is not done like that and stated, “Whenever there is a capital expenditure of this massive sum you must have what is called a project profile. Reopening three estates… did the minister say how much capital of this $3 billion will be going to Skeldon or Rose Hall or whatever else he’s opening and whatever else. You just don’t put three billion blanket like that and don’t put no project profile – that is against the FMAA [Fiscal Management and Accountability Act]”.
Mustapha yesterday said that he did not like the analogy that likened the sugar sector to a black hole. “They told me I was putting money down a black hole. The sector is not a black hole,” he argued.
The agriculture minister lamented on the socio-economic hardships that many families faced directly when government shut the estates and left over 7000 jobless. He said that that when the past government made its decision to shut the estates maybe it was their “black hole” decision but his government will ensure the sector shines.
“I will tell you what I told the Board. I said one of the most important tasks of this Board is to ensure that you bring to reality, the commitments that were made by the Government of Guyana to ensure we sustain sugar, and also that we re-open those estates that were closed. You have to look at the importance of the industry to workers, the communities and our country. We have a lot of ‘doom seers’ and ‘naysayers’ saying that Government is putting money into a black hole. Government does not, and will never see GuySuCo, and the sugar industry as a black hole,” he repeated.
He said that he also told them that he believes that critical capital works were denied by the previous administration. We also have to do a lot of work in the fields to ensure we get better yields and increased production levels. The Board has to work towards developing a capital plan for diversification of the industry, to support sustainability and the overall expansion of the economy. We have to look at the present state of the communities that were affected by the closure. With the re-opening of these estates, people are looking forward to their communities being re-energized, to having new areas of employment and a number of other benefits. Government remains committed to supporting GuySuCo with the necessary resources to propel the sector. We can already see a positive turn-around is happening and that the sector is already in an upward trajectory,” he added.
President Irfaan Ali last week told this newspaper that his government has to start from scratch and is now focused on redeveloping farmlands in order to deliver on its campaign promise to reopen shuttered estates since the former administration left the industry in ruins.
Ali stressed that despite the dire situation faced by GuySuCo, he is determined that the estates will be brought back to a standard that would be attractive for investors. “Let me say this – the political will and the commitment has not diminished by one iota. It has been strengthened because we are going to invest in the industry. We are going to create, bring back those jobs, bring back economic life and livelihood to those communities,” he said.
The Wales Sugar Estate, which was first of the four estates to be closed by the former government, will see direct financial assistance given to families since that estate no longer has the potential to produce sugar.
But a development plan would see sacked employees given lands to develop as part of a business hub is in the works.
In their present state, Ali said, the shuttered estates have “nothing to bring to the table” and had hinted at the partnerships mentioned in the EOI notice.
Under the APNU+AFC administration, the National Industrial and Commercial Investments Limited (NICIL) had invited expressions of interest in GuySuCo’s estates. After some expressions of interest these boiled down to nothing. Demerara Distillers Limited had once expressed interest in the Enmore estate but changed its mind.