GuySuCo fails to pay $1.5B in contributions to NIS

- another illegal way to channel money – Ramjattan

GuySuCo’s Chairman,
Dr. Rajendra Singh

The financial troubles of Guyana Sugar Corporation (GuySuCo) continue to worsen and there seems to be no end in sight.
There is confirmation that the state-owned company has been deducting monies from workers but now accumulatively owes over $1.5B to the National Insurance Scheme (NIS).
Union officials and GuySuCo officials confirmed that the issue has been engaging the attention of both the corporation and NIS for several months after Government agreed that time would be given to pay the money.
However, with over 16,000 workers, the issue has become a major thorn. There is growing worry about benefits which could be endangered because of the non-remittance of the NIS payments which by law are mandatory for employers.
Yesterday, Leader of the Alliance For Change, Khemraj Ramjattan, confirmed that his party has been receiving complaints from its members who are employed by GuySuCo.
“We have been hearing about some figures involved that is in the millions but if it is indeed true that Government has been allowing GuySuCo not pay to NIS so that they can have more cash, then it is highly illegal and not in keeping with regulations.”
Ramjattan said that GuySuCo and Government know that if they need assistance, then it has to come through the National Assembly. “You cannot just not pay. If NIS wants to lend money to GuySuCo then there are proper methods to follow but Government cannot illegally use this way to channel money to GuySuCo. It is illegal…period.”
Last year, the National Assembly approved $6B in cash to help the industry. But it was not enough to help the industry which has been struggling with low production for several years now.
Another major problem for GuySuCo has been efficiency and market prices. With regards to the latter, there is little that the corporation could do to counter prices.
The cost of production, however, is where the criticisms have been coming. GuySuCo is producing sugar at over US$0.30 per pound but selling for around US$0.18. GuySuCo admitted before a Parliamentary Committee last year that it cannot bring down the cost below US$0.26 by 2017 unless it gets another $6B.
Sugar prices on the world market are unlikely to rise anytime soon since there is a glut on the market with Brazil and other producers reportedly flooding the market by almost two millions tonnes.
Another major problem for GuySuCo is that its flagship estate, Skeldon, has been performing dismally at almost double what the older factories are doing. It took an average of 28 tonnes of cane last year to produce one tonne of sugar while the other estates were around 13 tonnes to one tonne of sugar.
Prices for sugar on the world market have also plunged from over US$715 per tonne in 2013 to last year just over US$315, compounding the situation.
GuySuCo itself is in a tight cash situation, forcing to borrow heavily each crop to pay expenses.
As at June, it owed almost $58B to suppliers, banks and others.
This includes over $20B for the Skeldon estate project and even the Neighbourhood Democratic Councils around the country are being owed.  With regards to the loan for Skeldon, Government is now paying it as GuySuCo cannot afford to.
The Opposition, threatening to withhold assistance, has been demanding a turnaround plan but since last year, the corporation has failed to table one.
Last year, GuySuCo barely managed to scrape by the original 216,000 tonnes of sugar it had set itself.
There have been calls for GuySuCo to diversify but Government has not made any firm decision on the direction- whether it is ethanol or privatization or other options.
Suppliers are now reportedly demanding cash upfront before making deliveries.
The Skeldon expansion project, which has been sucking the life of the industry, is the most expensive project to date in Guyana, costing over US$200M.
Shortly before he left office in 2011, former President Bharrat Jagdeo said he would have personally made it his duty to ensure that it is fixed.