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FM
Former Member

Sugar may need $16b to stay afloat

By Staff Writer On May 29, 2015 @ 5:25 am In Local News

The Guyana Sugar Cor-poration is requesting a whopping $16b to stay afloat otherwise the state-owned corporation is facing an industry-wide shutdown come Sunday.

Noel HolderNoel Holder

Stabroek News was informed that GuySuCo’s Chief Executive Officer, Dr Rajendra Singh was tasked with providing a comprehensive breakdown of the money required to stave off an industry shutdown. This followed his bombshell announcement to the sugar unions on Monday of the imminent closure of the industry if money was not found, in what has become a major problem for the days-old APNU+AFC administration.

Agriculture Minister Noel Holder confirmed to Stabroek News that he met with Singh yesterday and today the CEO is to provide him with an industry-wide plan. Holder said that “Mr Singh and I had a discussion, we think we have charted a way forward…he has to refine his document a bit more before we approach the Ministry of Finance.”

Holder noted that any further discussion including with the Finance Ministry was completely reliant on Singh’s ability to showcase how the money will be spent. “Only if we agree on that. If what he brings back is dissatisfactory, discussion will need to continue.”

Stabroek News inquired as to whether the Finance Ministry would need to be involved given that the Agriculture Ministry could provide immediate fiscal relief in the short term prior to a 2015 budget. Holder stated that the amount GuySuCo was requesting was large and that today he was looking for a “significant decline in that original figure.”

The Agriculture Minister told Stabroek News that “this isn’t like last time. Last year it was a line item, a line item in the budget. It is ridiculous you can’t just come get $6B on a single line item, no breakdowns.”

He said after discussions with Singh it was understood that there would be no government bailout without a comprehensive restructuring plan.

While GuySuCo is requesting billions in bailout money, a financial analyst familiar with the corporation’s history told Stabroek News that without a budget and without a functioning Parliament there is very little that can be done at this point in time to release large amounts.

The analyst told Stabroek News that the Agriculture Ministry could supplement the corporation by loaning four weeks of wages, approximately $600M. All of the government ministries have their own bank accounts with funds that can be utilized as loans for such circumstances.

Analyst Christopher Ram questioned how the government would be allowed to access the Contingency Fund for such a purpose and as a result he said that a bank loan taken out by the government may be one possibility.

Ram stated that the timing of the corporation’s declaration of an emergency was suspicious while noting that it seemed highly unlikely that there would need to be an industrywide shutdown. He noted that the Sugar Industry Labour Welfare Fund could be tapped into. GuySuCo is now in the out-of-crop period.

“It is really an awful dilemma. This is not only a GuySuCo problem, this is a country problem,” Ram said. Over 16,000 persons are employed by GuySuCo directly and thousands others would be affected by an industry closure.

He said that the countless subventions to the state-owned corporation by Parliament in recent years has played an incredible role in creating the present problem.

“I think the entire parliament has been delinquent. They have not attached any condition to the subventions made to GuySuCo,” he stated, adding that the corporation has not tabled any reports to the National Assembly as required by law for years.

“The Parliament, the Parliament of Guyana was pumping money into GuySuCo without the slightest hint of accountability,” he said.

Credit union

Meanwhile, the Guyana Agricultural and General Workers Union Co-operative Credit Union Society Limited issued a statement yesterday stating that GuySuCo owes $154,410,525 and it was therefore suspending its activities in the sugar industry.

Head of the main sugar union GAWU, Komal Chand called GuySuCo’s actions “immoral and illegal.”

He said that GuySuCo had been making deductions continuously for the past five months and only providing small payments to the Credit Union. Chand said that “this is not their money, this is workers’ money.”

Chand revealed that the Credit Union had previously been borrowing off of the promises that GuySuCo would become up to date on its payments. He said that now that the corporation has “declared themselves heavily broke,” over 5,000 sugar workers’ savings will be impacted.

He said that should a bailout be provided and workers return to work next week they had been informed to not allow the corporation to make Credit Union deductions.

“The sad decision, if it is not urgently redressed by the Corporation will cause the jobs of the Credit Union’s employees to be in jeopardy.

“The Credit Union, therefore, looks forward to receiving as early as possible from the Corporation the workers’ outstanding savings so that its dependable services to thousands of sugar workers would resume as early as possible”, the Credit Union said in a statement yesterday.

Yesterday’s action by the credit union, observers say, exemplifies how severe GuySuCo’s financial problems have been over the last few years and which problems were played down by the former PPP/C government. GuySuCo had also owed a substantial amount in remittances to the National Insurance Scheme.

The opposition PPP/C has not made any statement on the GuySuCo crisis even though it had been in government for the last 23 years and former President Donald Ramotar had been on the corporation board from 1992 until he assumed the presidency in 2011. Critics have said that the PPP/C government ignored the dire problems in the industry for the last five years, in particular, without coming up with viable solutions.

On Monday, Singh revealed that GuySuCo’s financial woes were so dire that without an immediate influx of money, operations would cease as of Sunday.

The corporation was scrambling to find funds earlier this year with the disclosure that the final destination for $3 billion which government had been attempting to transfer from the Guyana Geology and Mines Commission was GuySuCo.

Additionally, the corporation’s co-generation plant and three Wartsila power units at Skeldon were sold to a state-owned company specially created for the purpose at a price of US$30 million.

GuySuCo was also successfully sued by UK-based sugar management firm Booker Tate. On February 20, 2015 the High Court ordered GuySuCo to pay $204M for fees owed during the period Booker Tate managed the industry.

In the meanwhile, a one-year US$15M loan from National Commercial Bank of Jamaica to GuySuCo was being used to finance wages and operational costs . The status of the repayment is unclear although the loan was supposed to be paid back in full in 2015.

As of June last year, GuySuCo’s debt was at a whopping $58b equivalent to 31.6% of the 2014 National Budget.

Stabroek News was unable to reach Singh for comment up to press time yesterday.

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Replies sorted oldest to newest

“I think the entire parliament has been delinquent. They have not attached any condition to the subventions made to GuySuCo,” he stated, adding that the corporation has not tabled any reports to the National Assembly as required by law for years.

“The Parliament, the Parliament of Guyana was pumping money into GuySuCo without the slightest hint of accountability,” he said.

 

 

....eh eh is Parliament fault now?

FM
Originally Posted by TI:

“I think the entire parliament has been delinquent. They have not attached any condition to the subventions made to GuySuCo,” he stated, adding that the corporation has not tabled any reports to the National Assembly as required by law for years.

“The Parliament, the Parliament of Guyana was pumping money into GuySuCo without the slightest hint of accountability,” he said.

 

 

....eh eh is Parliament fault now?

Ahwe dayzz now, so shut up and sit down.  Wach ahwe fix all dem prablem, rememba ahwe track record before alyuh tek ova in 1992.

FM
Originally Posted by TI:

“I think the entire parliament has been delinquent. They have not attached any condition to the subventions made to GuySuCo,” he stated, adding that the corporation has not tabled any reports to the National Assembly as required by law for years.

“The Parliament, the Parliament of Guyana was pumping money into GuySuCo without the slightest hint of accountability,” he said.

 

 

....eh eh is Parliament fault now?

The PPP refusal to tell parliament about the country's business.

S

dem shuga workers who bin ah parlament an cuss Moses gat to go back an say sorry uncle Moses, dem chatree mek abbe do dah, see wha you go do fe abbe an abbe pickney nuh. Ow Sah, we ah beg U.

FM
Originally Posted by VishMahabir:

Moses has to do better than this rather than seek to punish or seek vengeance....a good politician will have to address this problem, whether workers apologized or beg for forgiveness...NO???

Moses is a student of Dr CBJ, a learned "canecuttah.  But he parted the waters, now that "Walls of Jerico" caving in, he struggling to keep his nose above the very water.  He ain't gatt time wid alyuh.

FM
Originally Posted by gogo:

dem shuga workers who bin ah parlament an cuss Moses gat to go back an say sorry uncle Moses, dem chatree mek abbe do dah, see wha you go do fe abbe an abbe pickney nuh. Ow Sah, we ah beg U.


Imagine the same people who screamed that "Linden black people lazy" are now coming to the taxpayers for a bail out.

 

Suppose APNU tells them that they are going to treat Rosehall the way that the PPP treated Linden, and just sell Guysuco to the Chinese.........

FM
Originally Posted by VishMahabir:

Moses has to do better than this rather than seek to punish or seek vengeance....a good politician will have to address this problem, whether workers apologized or beg for forgiveness...NO???


Moses isnt going to seek vengeance.  I hope those sugar workers apologize to him though.  Last year he wanted accountability from Guysuco and was humiliated.  Well now the same folks need to beg him.

FM
Originally Posted by caribny:
Originally Posted by VishMahabir:

Moses has to do better than this rather than seek to punish or seek vengeance....a good politician will have to address this problem, whether workers apologized or beg for forgiveness...NO???


Moses isnt going to seek vengeance.  I hope those sugar workers apologize to him though.  Last year he wanted accountability from Guysuco and was humiliated.  Well now the same folks need to beg him.

Moses should make you ecstatic. Close the estates. Put all dem cooolies out of work.  

S

They don't need to be put out of work. There is enough land and potential there to divest into alternative agricultural projects. But we do need to first find out who we are going to sell the harvest to. One big issue with the PPP has been in the area of foreign sales agents Jagdeo travelled the world, but cam back with only drugs shipment orders.

Mr.T
Originally Posted by seignet:
Originally Posted by caribny:
Originally Posted by VishMahabir:

Moses has to do better than this rather than seek to punish or seek vengeance....a good politician will have to address this problem, whether workers apologized or beg for forgiveness...NO???


Moses isnt going to seek vengeance.  I hope those sugar workers apologize to him though.  Last year he wanted accountability from Guysuco and was humiliated.  Well now the same folks need to beg him.

Moses should make you ecstatic. Close the estates. Put all dem cooolies out of work.  


You mean like what the PPP did to black people in Linden?  Perish the thought.  Indians are special people.  Blacks are scum so who cares about them.

FM

Container shipping from Guyana is costly. The government need to investigate and introduce shipping cost guidelines. Once, I got a lead on coconut sale to Fortleza, Brazil. It cost more to ship the container to Brazil than if it going to Belgium. 

S
Originally Posted by Mr.T:

They don't need to be put out of work. There is enough land and potential there to divest into alternative agricultural projects. But we do need to first find out who we are going to sell the harvest to. One big issue with the PPP has been in the area of foreign sales agents Jagdeo travelled the world, but cam back with only drugs shipment orders.


The problem isnt the lack of buyers.  The problem is that the 16c that they are willing to pay is way below what it costs Guysuco to produce the sugar.

 

Ironically the Caribbean is probably a net IMPORTER of sugar with most countries shutting down their industries, with a few producing mainly for their domestic markets.  Even the DR now exports less than 200k tonnes, when 30 years ago it was way over 1 million.

FM

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