GuySuCo confident about 2011 targets

Jun 05, 2011 News

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The news in the sugar industry has been dismal at best for the last five years and a recent comment by Chief Executive Officer (CEO) of GuySuCo, Paul Bhim, seems to add to that perception.
According to Bhim, the first crop of 2011 is likely to fall short of its target by some 25-26,000 tonnes. But despite the bleak picture that pronouncement paints for the 2011 target of 300,000 tonnes, the CEO says there will be no revision of this year’s targets.
In February of this year, the EU Ambassador to Guyana Geert Heikens called the GuySuCo 2011 sugar targets too ambitious. Asked about the shortfall in this crop against the backdrop of Heikens’ comments, Bhim defended the company’s decision to stick to their target.
He pointed out that in the past the industry giant has tended to overestimate their production figures. Critical to their shortcoming was the fact that they could not produce sugar from cane that they did not have. This year, Bhim notes, the estimates were based on the amount of sugar cane that has been planted and is to be harvested.
Prevention of harvesting, however, has proven to be one of the chief reasons for the shortfall of the first crop. According to Bhim, “the weather has not been kind to us”. He notes that despite the worker turnout issues that the company has been facing it is the weather that has played the most significant role in the shortfall. The heaviest impact has been felt at the Skeldon Estate where mechanized harvesting has been stalled by the foul weather conditions.
Attendance this year has risen to some 72 percent in estates such as Enmore – an improvement over last year when at least half of the workforce failed to turn up. In a recent interview with Stabroek Business, Bhim pointed out that it is a culture shift in the industry rather than industrial relations issues which is fueling the attendance problems.
He pointed out that less than a decade ago there were very few labour issues faced by the industry but as employment opportunities have opened up in other sectors and the possibilities of higher pay have lured away the sugar workers, the industry has begun to suffer in one of its most critical areas – harvesting. However, Bhim has stated that this year things are better than last year with the workers.
In other areas of concern, the Skeldon Sugar factory has long been a sore point for the GuySuCo bottom line. In July of last year the number one boiler at the Skeldon Estate went down with what were called “technical difficulties”. Bhim revealed on Friday, last, that the repairs to this boiler are currently on schedule and should be completed by the end of this month – after 11 months of down time. The repairs are currently being undertaken by the Chinese Contractors who held the initial contract for the factory.
In his interview with Stabroek, he states unequivocally that the Skeldon Sugar Factory has underperformed. He tells of a 66,000-tonne projection for 2011 which works out to little more than half the touted capacity of the facility.
Contrast this to statements made earlier this year by President Jagdeo who told sugar workers that he no longer intends to take such a large stake in the running of the Skeldon Sugar Factory because there has been a “turnaround” at the facility. The President said that the factory’s performance is showing an “upward trend” and has begun showing value for the US$200M invested in the facility. The President did however concede that there were still challenges posed by problems with the operations at the Skeldon plant.
Completed in 2008 and hailed as a state-of-the-art cane sugar factory, for which construction was supported with a combination of self-generated funds and loans from the Caribbean Development Bank (CDB), the People’s Republic of China and the Government of Guyana, the plant has been beset with production-related problems.
In previous reports, it was noted that among the problems existing at the factory was a low output ratio of cane to sugar. Upon completion of the factory, the authorities passed some 50,000 tonnes of cane through the new mill, but the amount of sugar produced was a mere 400 tonnes. A normal factory is expected to convert cane to sugar at a ratio of ten tonnes of cane to a tonne of sugar. A facility such as the one at Skeldon should have an even better ratio of production yet the ratio above works out to something like 125 tonnes of cane per tonne of sugar.
The Sugar giant’s financial health has also come up for discussion. Having been the recipient of several bailouts by the Government in recent years amounting to billions of dollars, the company still struggles to meet its obligations. The most recent injection of state funds into the company’s accounts came in February of this year to the tune of $1B.
In his interview with Stabroek, Bhim explained that with over 60 percent of costs being fixed costs and the company suffering a cash flow problem there will inevitably be consequences. One of these consequences is the refusal of some of GuySuCo’s creditors to continue doing business with the company. He noted however that the company has worked hard to attack their debts and in the last year their debt repayment has been a considerable accomplishment.
As the year progresses it remains to be seen if the company can live up to its ambitious plans for turning the industry around and start delivering on promises.

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