Latest update November 26th, 2024 1:00 AM
GuySuCo cannot cover its operating costs
DEAR EDITOR,
It is most tragic that GuySuCo has found itself in such a difficult position again at the end of 2014, where it is no closer to covering its operating costs. Twelve months have passed and the industry remains stuck in time, as the fundamental of the muddle remains unsolved – namely the Skeldon Sugar Factory.
The Skeldon Factory was positioned to be that state-of-the-art facility designed to reduce the cost of production and increase sugar production. Since it started production in 2008, it has contributed to neither of these noble objectives, compared to the performance of the old colonial sugar factory that was disbanded.
Today, GuySuCo is producing sugar at more than US$0.32 per pound when the world market price floats between US$0.15 –US$0.18 per pound. (See chart) Even with slightly better prices available to GuySuCo, the business is still selling a product that is making an average loss of US$0.10 per pound, which the taxpayers will again be called upon to fund. The arithmetic clearly points to GuySuCo asking the Treasury in 2015 for a further G$7 billion.
The Skeldon Factory has burdened the people of Guyana with a price tag of some G$47 billion so far and the cost seems to be mounting every single day. In addition to this core cost, the people had to “dish-out” some G$18 billion since 2008 to support the industry, principally as a result of the under-performance of this Skeldon Factory. With this additional G$7 billion “bail-out” expected in 2015, the total financial support to this failed Jagdeo project will tally at some G$72 billion by June 2015. To what end? Has the unit cost of production reduced? Certainly not!
With respect to GuySuCo, I am again suggesting that we frame the problem within the context of the profit and loss statement per estate and take decisive action on what those numbers instruct. If we cannot make hard decisions on the cost then clearly we are just kicking the “bucket with the hole” down the road and not mending it.
Trucking a couple hundred of sugar workers to Parliament to protest for a continuation of this failed PPP strategy is just absurd. For how long will the PPP continue to pour good money into a project without being transparent with the people and revealing to them the facts and a strategy on how they will end this drain on the Treasury?
Whatever happened to the Booker-Tate plan to produce raw sugar in Guyana at US$0.15 per pound? It might be a good base document to revisit.
Sase Singh
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