Dismal sugar industry…Govt. withheld billions in critical EU assistance to GuySuCo – Tony Vieira

Mar 26, 2013 News

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-Finance Minister says $39.5B invested over the years

Government is to be blamed for the sugar’s downward slide over the years, with billions of dollars of Europe’s assistance money never even reaching the coffers of the Guyana Sugar Corporation (GuySuCo).

According former Member of Parliament for the People’s National Congress Reform (PNCR), Anthony Vieira, the state-owned sugar factories last year stood idle 50 per cent of the time, because of a serious shortage of labour.
Vieira, himself a long time planter of sugar canes, has been writing about the industry for years now, criticising some of the policies.
GuySuCo lost its preferential price and together with a labour shortage, saw production plummeting to a new low last year despite attempts to jumpstart the industry.
Vieira in his analysis of the sugar industry last year, said from all indications, a poor labour turnout continues to besiege it.
“In 2012 the industry showed the factories standing idle, out of cane and not grinding, during the first and second crops, for a total of 10,527 hours. The actual time the factories worked during the year was 21,623 hours.”
Needless to say, Vieira noted, during a substantial part of this time, the factory’s workers had to be paid for standing by doing nothing.
“This alone prompts one to ask why are we struggling with this inefficient and costly industry? It is clear from these figures that for GuySuCo to survive more factories have to be closed or more efficient methods of delivering the cane to the factories must be developed.”
Vieira blamed the government for not doing anything since 2000 when it became evident that the workers were migrating away from the industry.

 

Starved of funds
“Beginning in 2006 the European Union [EU] had started paying the development fund to Guyana which was our compensation for the loss of the preferential price for sugar in the EU markets.”
Vieira argued that the money was supposed to be used to make the industry more efficient and competitive and that a substantial part of it should have been used to start the expensive process of converting the land for mechanical harvesting, on all estates, to offset the loss of workers.

This money was never released to GuySuCo and its board in its 2008 summary had warned that “this starvation of funds will significantly restrict management’s ability to achieve their objectives outlined in the GuySuCo strategy plans.”
According to Vieira, starting from 2006, the total amount paid was $24.7 billion but GuySuCo got none of it.
“In 2012 GuySuCo finally got a subvention of around $5 billion from the annual budget but today we have a poorly functioning sugar industry which had never received any of the $24.7 billion released to the Government to rehabilitate and make competitive the Guyana sugar industry.”
Vieira called on former Agriculture Minister, Robert Persaud, to explain what was done with this money.
“Given this government propensity for incompetence and corruption the money was clearly wasted on grandiose projects that cannot bring wealth to the nation or its people.”

 

Under Performance
Vieira saw the Skeldon factory as a very bad investment, being forced to grind at a rate of 196 tons cane an hour when in fact it was designed to operate efficiently at 350 tons an hour.
“The effect of this is apparent in its performance; the tons of cane to make a ton of sugar in 2012 at Skeldon was 16.29 whilst just next door Albion only took 10.52 tons of cane to make a ton of sugar. Skeldon therefore took 64.6% more cane to make a ton of sugar than Albion.”
The retired farmer said that one cannot buy and build a 350-ton per hour factory and grind at 196 tons per hour… the mills, the power generation depending on bagasse, the vessels for boiling the juice etc. all are underutilised operating at only around 56 per cent of their rated capacity.
It must have a very substantial effect on the economics of running “this costly and inefficient factory, and it is showing”.
“Also incredibly at Skeldon is the amount of grinding time lost for mechanical reasons at the factory— 550.51 hours. During 2012 the time lost at all the other estate factories for the entire year 2012 was 2130.55 hours, so this brand new alleged state of the art factory accounted for 25 per cent of the total factory downtime in the entire industry.”
The former MP also noted the dismal production for the year 2012…. 218,069 tonnes, the lowest in over two decades. “The production of the Skeldon factory was a total of 33,309 tons of sugar; Albion, for example, produced 54,022 tons.”
By this time, according to all of GuySuCo’s projections, the Skeldon factory should be producing 100,000 tons of sugar but “continues to be an unachievable and therefore expensive goal, and the time has come to ask if it is viable?
“At the very least a commission of enquiry should be set up to examine what has happened and what is the way forward if in fact there is one?”

Government has been pinning its hopes on the new Skeldon modernization factory in East Berbice, which has overtime cost government US$200M, to help revive the sugar industry.
But Finance Minister, Dr. Ashni Singh, yesterday said Government’s position on the sugar industry is clear and unequivocal.
“The industry is still of sufficient systemic importance to the national economy and to the livelihoods of so many rural communities and has such deep forward and backward linkages with suppliers and distributors nationwide that no effort must be spared to ensure its long term viability, competitiveness, and profitability.”
Over the years, Singh said, Government has injected a total of $39.5B to recapitalise the industry and to support its operations. As recent as last year, Government provided a transfer of $4B to ensure that GuySuCo was able to meet its financing requirements.
This year, Government will be providing $1B to GuySuCo to help the company meet the financing requirements of its transformation plans. “This support by Government to the sugar industry will redound to the benefit of the industry’s 18,000 workers, their families, and suppliers of goods and services to the company.
“Together, more than 120,000 persons will benefit directly or indirectly.”

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