GuySuCo in deep financial crisis
President Donald Ramotar
- owes creditors $10.5B
“No turnaround unless industry fixes agri problems” – GAWU warns
Government, this year, will be scrambling to find solutions for the country’s sugar industry as production fell to an embarrassing 23-year low in 2013.
Production at the eight estates in Berbice and Demerara closed on December 21, the last day of grinding, at a dismal 186,807 tonnes. This was below the 190,000-tonne figure that had been targeted and which had been revised again and again from the original 260,000 tonnes at the beginning of the year. The situation has now left the Guyana Sugar Corporation (GuySuCo) owing banks and suppliers in excess of $10.5B, union officials confirmed yesterday.
Last month, the National Assembly approved a $4B bailout to help pay its 16,000-plus workers and meet other critical expenditure.
However, according to Seepaul Narine, General Secretary of the Guyana Agricultural and General Workers Union (GAWU), the largest sugar workers’ union, the $4B will not be enough.
Agriculture Minister, Dr. Leslie Ramsammy
Once the ‘sweet king’, earning the hog’s share of foreign exchange, sugar has slid to third, behind gold and rice.
Already, the Corporation is facing the squeeze from its suppliers, with a number of them refusing to extend more credit. Hard-hit are supplies of spares and fertilizers.
Insiders have been blaming GuySuCo’s agriculture and technical problems, at especially its flagship Skeldon factory, as the biggest contributor to the decline of the industry.
Almost $200M has been spent to build the new factory in East Berbice and develop new lands to accommodate mechanical harvesting.
Kaieteur News was told that a cash-strapped GuySuCo took the decision to reduce its fertilizer quantity on the canes and is now paying the price with lower-than-expected yields.
The Skeldon factory itself remains a major problem. While it had targeted 43,482 tonnes at the beginning of the year, actual production at December 21 was a miserly 25,380 tonnes.
The problems at the factory have been known since being commissioned in August 2009, more than four years ago. A key punt dumper, critical to taking the canes from the waterways into the factory’s conveyor systems, has been malfunctioning. So too had other areas in the factory.
Several faults have been fixed by the Chinese contractor, but with the defects liability period over, GuySuCo had turned to South Africa’s Bosch Engineering this year to help address some of the issues.
With more than US$8M ($1.6B) reportedly being spent on Bosch, GuySuCo and union officials have admitted that the remedial works have not gone so well. Workers are now attempting to fix those “repairs”.
GAWU General Secretary, Seepaul Narine
Yesterday, Narine called for a collective effort in solving what is now turning out to be crisis.
“We are saying to management and workers that the industry is at a crucial stage. It calls for understanding and cooperation between management and workers.”
GuySuCo has been blaming poor weather, strikes and workers’ absence as the biggest factors in the slide. Turnout has on average been below 50% and has been that way for the last few years. Workers have been finding a more permanent fixture in the construction and mining fields.
“Yes, labour remains a big issue. They (GuySuCo) have been using the bell loaders and mechanical harvesters. But this is still not enough.”
GuySuCo’s report of 2012 has told an alarming story. Factories stood idle most of the time.
GuySuCo, to meet its European quota of 190,000 tonnes, has been sacrificing its packaging arm at Enmore. However, the European quota is not likely to pose such a big issue, as under the agreement, the year runs from October to September, union officials said yesterday.
It is still not clear whether Guyana will be importing sugar to meet local demand.
While GuySuCo has been saying technical problems have forced tonnes of cane to be carried over to the new year for the new crop, union officials yesterday claimed that in an effort to meet the 190,000-tonne target in December, young canes were cut. “So we were actually cutting young canes,” a GuySuCo official admitted yesterday.
GuySuCo closed the year owing creditors around $10.5B, GAWU has said.
The industry has been an embarrassing one for the Government with problems carried over from the Bharrat Jagdeo administration to the Donald Ramotar government.
Despite a promise to revamp the Board of Directors, there have not been any significant moves.
This year, industry officials say that GuySuCo is mulling a 260,000-tonne target but this also seems a little too high.
The Opposition has criticized Government on what seemed to be a reluctance to take action, despite the poor run of performance of GuySuCo.
Last month, the ruling People’s Progressive Party (PPP) expressed worry over the industry, calling on “all stakeholders to redouble their efforts to turn things around. Sugar is still the largest employer of labour and any further decline in production could have disastrous effects on the livelihood and wellbeing of sugar workers and their families.”
The Alliance For Change has called for the immediate sacking of the entire GuySuCo board and replacing of management.
Last month, after days of strike action, GuySuCo agreed to pay its workers their annual production incentive. This will be done in two parts, during the first quarter of this year. The Opposition, during the 2013 National Budget debate, had demanded an updated recovery plan for GuySuCo to be laid in the National Assembly.
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