Int’l firm being hired to value GuySuCo’s assets

Oct 31, 2017 News

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-State banks on leasing lands, selling factories

Moves are underway to select an international accounting firm to value the assets of the Guyana Sugar Corporation (GuySuCo) for privatisation and divestment.
Yesterday, according to Colvin Heath-London, Head of the Special Purpose Unit (SPU) established under the state-owned National Industrial & Commercial Investments Limited (NICIL) to handle the transactions, a selective tender process was conducted for an international firm to conduct the valuation.
“Selected tenders were invited from PriceWaterHouseCoopers, Ernst & Young, Deloitte, and KPMG to provide the services to the SPU as International Financial Services Provider.”
The selected firm would be conducting the valuation of all assets under the control of GuySuCo, in addition to other advisory and financial services.
The tender closed yesterday.
“When the tender closed (yesterday) the SPU had received submissions from all four of the invited companies. An award should be made within two weeks. It is expected that the valuation of the assets and the preparation of a prospectus will be completed by the end of January 2018.”
Speaking about the approach being taken by the SPU, Heath-London explained that he believes that “there is a future for sugar in Guyana, and that sugar production must be protected and remain part of the economic mix in the economy.”
He hastened to add, “How sugar is protected depends on a combination of options for the existing assets involved in sugar production.”
In the mix of options being contemplated are privatization and diversification.
“The SPU is interested in companies, both local and international, that could integrate the production of sugar into their existing operations and product mix.”
Heath-London said that “companies that are in rum production, other beverage manufacturing, and food processing, for example, would be ideal as potential operators of some of the current GuySuCo assets.
”The position being taken by the SPU is that all of what are considered GuySuCo assets are really national assets vested in the control of GuySuCo. As such, while factories could be sold to potential operators and investors, lands will not be sold but could be leased so that they remain the property of the state.”
According to the SPU, many persons are looking for the survival of sugar because of the fears of job loss in the sugar-producing parts of the country with some romantic about the country’s history with sugar.
“The approach being taken by the SPU seeks to tackle the economic problems of GuySuCo while finding ways to defend the jobs in sugar, and to ensure that the culture and history of sugar in Guyana would be protected.”
According to the SPU, it should be noted that sugar lands and sugar factories are not the only assets under GuySuCo’s control.
“For decades, GuySuCo was tasked with providing and/or managing a wide range of other assets including community centres, sports grounds and other recreational facilities, primary health care facilities, drainage and irrigation networks, and water conservancies.”
These, for example, made GuySuCo critical to national drainage and irrigation activities for agriculture and for flood control.
The SPU said that all of these were important social, economic, and infrastructure obligations provided by GuySuCo, often at the expense of profitability.
“As an example, the fortunes of GuySuCo had an impact on cricket, horse racing, swimming, athletics, and cycling. The effects were felt by entire communities and not just sugar-workers’ families.”
Bankrupt Model
The unit said that notwithstanding the critical value of these other services, continuing to depend on GuySuCo to provide them is a bankrupt model that must be changed.
“Many of these other properties will be privatised, divested or otherwise placed under different management arrangements.”
Already, advertisements have been placed for Expressions of Interest (EOI) in the sugar factories and estates. The deadline for the EOI has been extended from November 3 to November 24.
GuySuCo is facing major problems with sugar being produced at three times what it is being sold for.
Workers are slowly drifting away with strikes, poor weather and agriculture and little cash compounding the situation.
With Skeldon, a US$200M project that involved a new factory, unable to perform and proving a cash drain, consecutive governments have been forced at the expense of other sectors, to plunge billions of dollars in GuySuCo annually in cash bailouts…with little to show for it.
The administration, which came to power in 2015 under David Granger, had vowed to make the industry lean and profitable.
However, the unions, facing a loss of membership from the job reduction that is coming, is not taking it easy, and objecting to the restructuring of GuySuCo.
Last year, the century-old Wales was closed and Enmore and Rose Hall estates are also facing closures.
The industry is headed for another disaster year with production expected to barely make it to over 150,000 tonnes.
Many of the factories and fields are badly in need of cash for retooling and reconfiguration for mechanical harvesting.

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