Sugar turnaround…GuySuCo considers moving HQ to Enmore, selling off Ogle lands

Jul 20, 2014 News

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– refinery for Skeldon, distillery at Albion

As part of its plans to pull the industry from its current slump and make it more efficient, the Guyana Sugar Corporation (GuySuCo) is looking to pursue a refinery plant at Skeldon and relocating its headquarters to Enmore.

The idea to build the refinery is not new since it was seriously considered and discussed when that US$200M project was undertaken over five years ago.
The diversification plans also include a distillery at the Albion Estate, under a Public/Private Partnership (PPP) financing model, and an expansion of the current ethanol operations at that estate.
At Enmore, East Coast of Demerara, it is the plan to create an industrial complex, moving GuySuCo’s headquarters from Ogle to there. The relocation of the headquarters will allow for lands to be released and sold to raise cash for the industry.
Among other things, the complex at Enmore will also look at producing electricity with the construction of a co-generation facility that will use bagasse.
GuySuCo is also not ruling out the possibility of selling bottled molasses in Guyana and the Caribbean.
The disclosures were made recently when GuySuCo’s top executives and Agriculture Minister, Dr. Leslie Ramsammy, appeared the Parliamentary Sectoral Committee on Economic Services to talk about the industry.
Sugar production in Guyana is facing one of its worst ever periods with workers leaving in droves and costs almost double the market price.
The situation is not expected to improve anytime soon with GuySuCo saying that production costs will only come down from US$0.34-US$0.35 per pound just around US$0.25 by 2017.
GuySuCo is forced to sell below US$0.20 per pound while world market price remain an average now at US$0.17.
The Opposition-controlled National Assembly has been demanding answers from GuySuCo on how it intends to turnaround the industry which over the last few years have been depending on Government for bailouts.
Between last year and now, $10B (US$50M) was approved for GuySuCo by the National Assembly to help with operations, fixing problems at the factories and in the fields, and buying equipment to improve mechanical harvesting.
GuySuCo says it is also actively outsourcing cane production to private farmers and reducing dependency on its major European customer, Tate and Lyle, and looking more at the CARICOM ones for its packaged sugar.
But things are not looking good for GuySuCo. The world market price for raw sugar fell from over US$700 per tonne in December to below US$500 in February.

New measures in Europe in 2017 will allow other customers to sell there, resulting in possibly even lower prices.
According to GuySuCo, it has started looking for other markets with a 12,600 market quota found in the US and another niche in Italy.
The sugar industry situation has been sparking increasing concerns by not only Parliamentarians whose supporters are included among the 16,000 workers that GuySuCo directly employs, but also industry experts and analysts who believe that plunging more money into what seems like a bottomless pit makes no sense at all.
GuySuCo itself has been actively pushing for mechanical harvesters to help reduce the impact of labour shortage. The industry has also announced that it will actively explore the production of ethanol on a large scale as a viable alternative.
Former Member of Parliament, Anthony Vieira, who had a long history in sugar, has also slammed the US$200M expansion of Skeldon, calling it “a monstrous mistake by itself.”
“They are reluctant to admit that they created a white elephant and are now making a second mistake by turning to the production of packaged sugar instead of ethanol, which is what they should have done once they had made this disastrous decision to expand the Guyana industry when everyone else was downgrading/abandoning theirs.
“Trinidad, Jamaica, St Kitts and Barbados are good examples, due to the loss of the EU subsidy,” he said in a letter published last week.
GuySuCo owes US$170M in both short and long term debts, including for the troubled flagship Skeldon factory. This includes banks – both local and foreign, suppliers, the Guyana Revenue Authority, the National Insurance Scheme (NIS) and the Sugar Industry Labour Welfare Fund Committee (SILWFC) some $58B.
With regards to NIS payments, there have been repeated claims of non-payment of contributions, and there are now fears over how this will affect workers who are claiming benefits.
It also owes another US$112M loaned to the Guyana Government for the New Skeldon Sugar Factory by the World Bank, China EXIM Bank and Caribbean Development Bank.

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