GuySuCo gobbles up $4B from Treasury before end of first quarter

May 07, 2017 News

For 2017, the Government made an allocation of $9 billion to the Guyana Sugar Corporation (GuySuCo). This was in an effort to support the financing of the entity’s operations.

GuySuCo Chairman, Dr. Clive Thomas

But even before the end of the first quarter, the company has already sucked up $4B. The situation is one which has left some Government officials worrying whether the remaining $5B will even be enough to last the company for the next nine months, especially since it is making significant losses.
In the meantime, the sugar projections and production figures for the sector continue to be bleak. According to statistics by the Ministry of Finance, sugar produced in February, last was 3,669 tonnes compared with 5,151 tonnes in February, 2016.
The Ministry said that sugar was produced mainly at Blairmont and Uitvlugt. Production was affected by rainfall, strike actions which resulted in some workers being off the job, and suspended production at Skeldon. The latter occurred due to the unsafe nature of the co-generation plant.
The $9B brings Government’s direct financial contributions to the sector to be $32B. Ongoing challenges in the sugar industry may result in the downward revision of Government’s 3.8 percent growth rate for the economy in 2017.
In addition, GuySuCo continues to remain caged in a colossal mess of financial debt.
Officials at GuySuCo say that the industry has found itself “buried” in over $90B in debt.
Based on an overview of GuySuCo’s accounts, its Chairman, Dr. Clive Thomas, has said that it was just less than this for 2012 to 2014. Dr. Thomas said that, in no uncertain terms, “The sugar industry is now sitting on an economic time bomb.”
The economist said that he had warned about this. In a series of previous columns he had dedicated to examining and proving that the industry was at a point of no return.
“But my findings were either too alarming for some to digest or were just completely ignored. People should not allow themselves to be left in bewilderment when they hear certain things coming out at this point, like the industry being unable to pay its workers. I had pointed to many of these before,” Thomas said.
He added, that he was not the least bit surprised when it was announced that the coffers of the industry does not even have enough money to pay some of its workers.
Dr. Thomas said that GuySuCo has become the entity which produces less and less sugar and it’s costing more and more, while the price of its sales declines.
He posited that GuySuCo’s survival now depends on direct official bailouts while it increases its indebtedness. He said that this quite frankly is unsustainable.
But one of the priority issues for the Chairman remains reducing the sector’s heavy reliance on bailouts. Dr. Thomas said the entity hopes to do this through diversification.
He said, “What we are projecting is that we would use some funds to pursue the diversification of the industry. In this regard, we see bailouts rising for about two to three years and then falling dramatically by 2020.The bailouts or need for it, can fall by 2020. We hope to pursue diversification of some of the estates one of which includes Wales.”
Lending much credence to the Chairman’s position was Anthony Vieira. Vieira who once served as a GuySuCo Board member has been appointed head of the state entity’s Diversification Unit.
Vieira agreed that diversification of the sugar industry can bring an end to the sector’s reliance on billion dollar bailouts.
He said that the Unit is currently in the process of coordinating a diversification process with regard to aquaculture and the cultivation of rice.
Vieira said that the Unit is awaiting a USA study on the feasibility of GuySuCo’s proposed aquaculture venture.
“For the time being, I can say that the people conducting the study believe that this is a very feasible project and that aquaculture can be many times more profitable than growing cane,” Vieira added.

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