GuySuCo sliding to worst performance in 20 years

Nov 05, 2013 News

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– Foreign manager at helm of troubled Skeldon

With less than two months remaining for the year, the country’s sugar industry is slowly grinding its way to its lowest production in two decades and there seems to be no clarity on the way forward.
As a matter of fact, it will negatively eclipse last year’s dismal 218,069 tonnes. The 2012 production has been described as the worst in the 20 year reign of the People’s Progressive Party/Civic (PPP/C).

Production targets have been revised downwards from the 260,000 tonnes set at the beginning of the year to 203,000 now. The year’s first crop fell short of the 70,000 tonnes by an alarming 22,000.
Industry officials, over the weekend, admitted that the situation over production has plunged the Guyana Sugar Corporation (GuySuCo) into a point of uncertainty where unless all stops are pulled out, the slide will continue.
The administration has been saying that the industry is too big to fail but could find little answers.
At the flagship Skeldon factory, production for the year is slated at 34,000, far below the targeted 43,000 tonnes. The strain from Skeldon’s poor showing has been taking a toll on the overall operations of GuySuCo.
Since being commissioned in August 2009 by former President Bharrat Jagdeo, the Chinese built US$200M project, which includes the factory and expanded cultivation, has been bleeding the Corporation. Almost US$15M ($3B) has been sunk to repair several faults.
South African-based Bosch Engineering was hired earlier this year to fix some of the problems. These include issues with the co-generation power plant. However, still to be resolved are issues with the cane shredder and the punt dumper. The latter is critical to the efficient transfer of canes from punts in the waterway to the actual factory.
Bosch has been paid over US$4M for its work and after two weeks, left around mid-year.
There are no immediate indications when the shredder cane dumper will be fixed.
According to GuySuCo officials, the irony of the situation is that the weather has held up in recent weeks despite threats from sporadic showers.
“So what we have is lots of cane in the field at Skeldon but the factory is still unable to take it off the field,” an official confirmed yesterday.
While the factory has been built to process 250,000 tonnes per hour, its intake because of technical issues, have been limited to around 180,000, a hugely worrying factor.
New manager
In an attempt to steady Skeldon, Government has reportedly hired Tate and Lyle, its European sugar buyer, to manage the factory. Richard Orr has been operating as the new estate manager since earlier this year. But while Government had signaled intentions to seek overseas help, there had been no official announcements that management has changed from local hands.
Part of the restructuring of GuySuCo has also been the reported hiring of Dr. Raj Singh, its current Chairman, to take over as the Chief Executive Officer (CEO) from Paul Bhim. Bhim, himself the former Chief Financial Officer, was reportedly set to become the Deputy CEO.

A few months ago, GuySuCo, in the beginning of what seemed to be a major shakeup in management, give notice to Rajaindra Singh, the Deputy CEO, of its intentions to cut his contract short. Singh left last month.
Current Chairman, Dr. Raj Singh, was reportedly set to take up the appointment as the new CEO last Friday, November 1st. However, there have been no movements as yet, union officials confirmed yesterday. Questions had surfaced about whether he was qualified for that position. GuySuCo is reportedly flying him in from his United States residence and paying for his accommodation here.
The industry, at one time the biggest earner for Government, has become a major headache for them. Saddled with a phased price cut by Europe, its biggest buyer, GuySuCo has been battling labour shortages as well as poor weather conditions.
A $2B investment, using Europe’s cash that was designed to help the sugar dependent countries recover the price cuts, into a packaging plant at Enmore, has failed to change the situation. The reason was simple – there were just not enough canes to meet the 190,000 tonnes quota that Europe wants. That story has been repeating itself in recent years.
This year, as part of assistance to help the ailing industry, Government earmarked $1B for GuySuCo. This was $4B more than last year.
Writing about the industry earlier this year, former sugar official and Member of Parliament, Tony Vieira, said that indications were that the industry, in 2012, showed the factories stood idle, out of cane and not grinding, during the first and second crops a total of 10,527 hours. “The actual time the factories worked during the year was 21,623 hours this means that due to an acute shortage of labour to cut the cane the factories were standing idle 50% of the time during the crops waiting for the cane to be delivered, needless to say that during a substantial part of this time the factory’s workers had to be paid for standing by doing nothing.”
Government had said that the European price cuts had seen Guyana losing around $10B annually in revenue. However, the Opposition has accused the Government of contributing to the slide of the industry as the assistance coming from Europe was not used to help GuySuCo cope.
Earlier this year, Guyana signed a 23M Euros ($6.4B) financing agreement as part of Europe’s continuing assistance programme for sugar. It would have meant that Guyana drew down 115M Euros since the programme started back in 2006. The measures were developed by the European Union to help Guyana and other sugar-producing nations deal with the fallout from the price cuts.
The factory, said to be Guyana’s most expensive project, was constructed with a combination of self-generated funds and loans from the Caribbean Development Bank, the People’s Republic of China and the Government of Guyana.

 

 

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