Ramotar explores India’s help to rescue GuySuCo

Jan 11, 2015 News

President Donald Ramotar, who is on the six-day visit to India to attend the Pravasi Bharatiya Divas (PBD) celebrations, has visited one of that country’s top performing sugar factories.

President Donald Ramotar

It may be a signal that Guyana would be asking India for help to rescue the troubled Guyana Sugar Corporation (GuySuCo).
According to a Times of India news report yesterday, Ramotar flew in to the Valsad Sugar Factory on an Indian Air Force chopper where he was “impressed with the functioning of the sugar factory and praised the state-of-the-art technology” used to crush the sugarcane in order to make the crystals.
Talking to the management of the Valsad sugar factory and district collector of Valsad, Dr Vikrant Pandey, Ramotar said that the relationship between India and Guyana is very old and that it is going to be further strengthened in the coming days.
The Government of Guyana has been struggling for over five years to make the new Skeldon factory work efficiently.
Built by the Chinese under a US$200M programme the Skeldon factory continuously failed to meet targets. Despite being the newest facility in Guyana and hailed as a saviour to the industry, Skeldon last year went down as the worst performing factory in Guyana. It took almost 27 tonnes of cane to make one tonne of sugar, more than double the industry’s average at the estates for the second crop which ended in late December.

Guyana is exploring the possibilities of Indian help to help fix GuySuCo’s problems.

Guyana was forced to hire a South African firm, Bosch engineering, and spend over $1B to help fix some of the technical problems. However, the estate, a brainchild of former President Bharrat Jagdeo, has continued to disappoint.
Guyana has reportedly quietly hired a number of Indians already and since last year they have been working at a number of factories.
The industry is in a deep cash crunch, borrowing almost US$20M last year to finance expenses from its crops.
In June, GuySuCo officials met with a Parliamentary oversight committee and reported that millions of dollars more would be needed to buy harvesting machines and improve efficiency. However, it will not be enough to bring down the current cost of production to sustainable levels by 2017.
In June last year, Guyana was producing at over US$0.35 per pound, almost double at what the world price was. In 2017, with interventions, this cost would only come down to US$0.27.
To compound matters, world prices fueled by a glut say the prices tumbling from US$715 per tonne of sugar to US$350 in December.
GuySuCo has remained a major embarrassment for Government with little answers for the myriad of problems.
The industry is the country’s biggest employer…almost 16,000 or more employees.
With significant supporters among the workers, political parties, including the ruling PPP/C, have been reluctant to make any hard decisions.
A number of Caribbean countries have already exited sugar production after Europe announced opening it markets to other players. Guyana lost its preferential price and over a period of five years saw revenues plummeting more than 35 percent.