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President defends plugging more $$$ into struggling GuySuCo
President Donald Ramotar has defended plugging billions of dollars more into the sugar industry despite revelations that it is unlikely to turn a profit anytime soon.
Rose Hall estate,
East Berbice.
The state-owned Guyana Sugar Corporation (GuySuCo) is asking for billions more to finance a number of projects on its estates in Demerara and Berbice that will reduce dependency on manual labour and open up new lands for canes.
The industry has been failing to meet production targets in the last few years, sliding to a 23-year low last year of just below 190,000 tonnes.
Between last year and the present, some $10M has been plugged into the industry to help operating costs and the financing of key projects.
GuySuCo’s top officials admitted over a week ago before a Parliamentary oversight committee that its production costs, at around US$0.34 per pound of raw sugar, is almost double what it was selling for. By 2017, a raft of initiatives and projects that will costs billions will only bring the cost to around US$0.25.
During a press conference at State House yesterday, the President was asked to justify more spending.
Making it clear that it is not the first time that GuySuCo has found itself in such a situation, the official pointed out that the industry is a “price taker, generally”, with prices fluctuating regularly.
GuySuCo, he insisted, has taken several steps to reduce costs and diversify its operations to help compensate for the low prices.
These include reducing the quota of raw sugar on the world market and increasing supplies to the regional markets with its packaged products.
As a matter of fact, the industry has seriously started looking at new streams of income, including building more co-generation power facilities at the factories that will use bagasse and other by-products to produce power to be sold.
GuySuCo will also continue to explore producing ethanol fuel, moving from the current pilot project at the Albion estate, Berbice to another level.
There is also research being done to compress bagasse into bricks, to be used in place of wood at the factories, as well as in the use a cheaper bio-fertilizer.
Already, to cut costs, GuySuCo is releasing some of its cane lands to private farmers.
Ramotar does not believe that things are that bad that hope should be given up for the industry.
The President was also convinced that the sugar prices, which fell from over US$700 per tonne to under US$400 between December and February, will rise before the end the year.
GuySuCo is also exploring actively, the building of a sugar refinery with the regional market again to be targeted for the higher prices.
While things are “tough” for the industry, it would be worthy to continue lending support, he said.
Government has said that the answers to the industry, which directly employs around 16,000 persons, the largest employer in the country, are in mechanization and diversification.
Critics have been saying the problematic US$200M Skeldon modernization project, which included a new factory, is to be blamed with a number of technical issues remaining despite only being commissioned five years ago.
GuySuCo owes US$170M in both short and long term debts to banks – both local and foreign, suppliers, the Guyana Revenue Authority, the National Insurance Scheme (NIS) and the Sugar Industry Labour Welfare Fund Committee (SILWFC).
The Skeldon expansion project is the most expensive project to date in Guyana.
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