Closed GuySuCo sugar estates will be difficult to reopen – Economist

Mar 15, 2022 News

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By Zena Henry

Kaieteur News – Just months away from its two-year milestone in office, the People’s Progressive Party Civic (PPP/C) government is yet to reopen sugar estates closed by the former A Partnership for National Unity + Alliance For Change (APNU+AFC) administration. It was one of the key points on the party’s 2020 elections manifesto, but Economist and former Presidential advisor, Ramon Gaskin believes that it is a promise the government will be unable to keep.

Gaskin in an invited comment said that the entire industry is in a dire state, something that the government is fully aware of. He believes that while the government would indeed like to reopen the estates, they will instead find other uses for the assets as the life of sugar in Guyana remains a question of viability.
“That manifesto promise was premature, it was all premature statements not based on proper assessment. It was only until they got in there and finally checked properly that they saw it would not be so easy. Then they saw how bad it was, that the whole thing ‘bruk up’.”
Gaskin, who had supported the move to downsize the Guyana Sugar Corporation (GuySuCo) said that GuySuCo’s previous problems, in particular cost of production, which led to the closure of some estates in the first place, still very much exists and continues to be a significant hindrance to turning the facility around.
Gaskin believes that the majority of the non-functioning sugar facilities will eventually be utilised outside of sugar production.
“Just like the Enmore Packing Plant. All of these will be given to private citizens; family and friends,” Gaskin charged. He said that prior to the 2015 change in government, GuySuCo was already performing poorly and facing several issues that arose from, among other things, poor investments using very large sums of money. He pointed to the US$200M Skeldon factory modernisation project that saw GuySuCo putting in US$53M of its own already scarce funds in a project, which is yet to make its investment returns. He pointed to the US$75M that was used to repair the Skeldon plant, the unjust sale of its co-generation plant that now prevented the company from generating its own reliable and efficient energy for its factories, and the building of the now leased US$12.5M Enmore Packaging Plant, as just examples of how the industry was driven to its ailing financial position.
Gaskin reminded that even the “3,000-worker” strikes over the years were all factors leading to the reduction of the industry.
In fact, for last year alone, GuySuCo’s Human Resources department confirmed 63 strikes in the sugar belt causing “20,000-man days” lost. The financial consequence of the situation, the company said, was value loss to the industry to the tune of G$740 million, despite some strikes being unrelated to sugar operations such as the strike for the government promised G$250,000 cash grant for severed workers and flood relief. Those October 2021 strikes alone had cost GuySuCo G$378 million.
At this point, Gaskin said, the cost of fertilisers, labour and market prices are all factors that will provide difficulties in getting the sugar industry up. “GuySuCo has been losing money since time in memoriam. So yes, they would like to reopen the estates, but not so easily, not with the cost of fertiliser, labour cost, crop production… no it won’t be so easy.”
The government had pointed out however, that the shuttered Rose Hall sugar estate would be the first facility to reopen. It was mentioned in 2021 that the Rose Hall facility would be ready by October this year for reopening. However, a more recent report from the State newspaper, the Guyana Chronicle, on March 14, last reported that the estate manager has now given the facility a 2023 start date, while informing that the facility was also 51 percent rehabilitated.
When asked about the time being taken to get sugar workers back out to work, Aslim Singh, the Guyana Agricultural and General Workers’ Union’s (GAWU) General Secretary, said that, “the union could only go on what it is told.” He said that the government has informed that the reopening of the estates would be done in a phased manner. He said however, that while some of the information he gets regarding the estates often comes from what he reads in the media, he is aware that rehabilitation may be proving a bit more tedious since the sugar company has to deal with matters of clearing significant overgrowth, machinery operability, among others. Speaking on the viability of production, Singh said GuySuCo’s CEO has spoken about better prices for packaged sugar and better successes in that area, while working to reduce production cost.
In the end, Singh indicated that the union must wait as the government tries to revitalise the industry.
Gaskin reiterated however, that sugar production in Guyana will not be viable once the country continues to produce above global market prices. The economist said that the only way that GuySuCo might break even is if the co-generation plant that was removed from the corporation is returned where it can generate its own cheap energy and even sell to the national grid.
“It was a conscience decision by Jagdeo because he knows that they would not be reopening the estates,” Gaskin opined, referring to the $250,000 payout that was given to the thousands of sugar workers that became redundant when the estates closed. The economist disagreed with the $250,000 payout, which came up to a total of some $1.7 billion. He said legally, those workers had already been paid their severances, where some of them received as much as $1.1M.
A total of $6B is expected to be injected into GuySuCo this year, government has said, an existing trend long before the closure of the four estates. Between 2020 and last year alone, some $30B was injected into the sector.
Gaskin reminded, however, that while billions of tax dollars continue to be pumped into the ailing sugar sector, Guyana continues to pay the “burdensome” US$43M for the Skeldon factory that never rescued the sugar industry as touted by the government.

 

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