Govt to discontinue GuySuCo Subsidy

Vibert Parvatan

Sugar turns bitter….

– final CoI report to be presented month-end

By Alexis Rodney

Guyana’s already broken down economy might be too fragile to continue the sustenance of the ailing Guyana Sugar Corporation (GuySuCo), and the final report into the investigation into the circumstances leading to its current state of affairs will reveal this and give Government an idea on the way forward.

This was revealed by Vibert Parvatan, Chairman of the Commission established to examine the operations of the Sugar Corporation. He, along with other commissioners, and Agriculture Minister Noel Holder met with members of the media on Friday to give an update on the CoI which was scheduled to come to an end on September 30.

Parvatan lamented the condition of the industry, particularly the financial pressure it imposes on the economy, with the multibillion-dollar subsidies it receives from Government. Both the past and current Governments have pumped billions of dollars into the operations of the Corporation, and Parvatan posited that this did not speak well for Guyana’s weakening financial system.

“Both Governments have been committed and compelled under the caption of bailouts or subsidies to keep the company afloat. While subsidies are not new to sugar industries, the Government of the day, conscious of its sympathy and support for the industry, acknowledges that they have their own limits in terms of funding,” Parvatan told the Press.

According to him, “the little economy of Guyana may not be able to sustain such levels of subsidies”.

If GuySuCo was seen primarily as a business, there would have been a simple obvious solution to the situation, Parvatan said. But things, as they are now, prove that GuySuCo is “more than a business. It impacts on the lives of Guyanese, particularly those living along the Atlantic coast”.

The Chairman said it was against that backdrop that Commissioners were asked to make recommendations on the way forward for the industry. According to him, the task is complicated, but not insurmountable. He said there were a number of suggestions that have been placed before the Commission. And while many of these proposals could not be recommended to Government because of the theory of impartiality, they were in the process of looking at some sections would benefit the people.

GuySuCo, he reminded, has been operating at a loss of billions of dollars annually.

“It is no secret that GuySuCo is in a very critical situation, with their yields declining”.

He said GuySuCo had years back been able to maintain its production at a minimum of 300,000 tonnes, today the production continues to “go down and down”.

To compound the problem of declining production, he said the unit cost of production has been climbing. Sources at GuySuCo have informed him that as things stand now, the world market price is some 13 US cents per pound and, in the same vein, the Sugar Corporation has advised that its current cost of production is around 45 cents per pound.

He said the historical position of the European Market, which gave the preferential prices and which was a bonanza in times past, was now going downhill. According to him, every estate from Skeldon to Uitvlugt was operating at a loss.

“That loss position did not start this year or last year. It goes back to a number of years and each year the figure has been climbing. Last year, it climbed to $17 billion, which is a major concern,” he said.

“In essence, the accountants will say that GuySuCo is insolvent, the past Government and the present Government have been committed and compelled to inject funds under the caption of bailout or subsidies to keep the company afloat,” said Parvatan.

Speaking on the progress made so far by the CoI, Parvatan said currently the sub-committees’ reports have already been submitted and each was being placed before the Commission for presentation and discussion.

The Inquiry into the Sugar Corporation began in July of this year. Government said the objective was to develop a plan which would bring the State-owned enterprise, which has been operating since 1976, back to profitability, and assure its long-term environmental and economic sustainability.

The Commissioners, who are tasked with development planning for this purpose, are mandated to “investigate and inquire into the current state of cane cultivation, production, and marketing of sugar, molasses and other by-products, including power”.