Dear Editor,
It has been reported in the media that after three years of mismanagement and continuous heavy operating losses, the Government has transferred control of the Guyana Sugar Corporation (GuySuCo) — Guyana’s largest agricultural industry and employer — from the Ministry of Agriculture to the Ministry of Finance, where it will be managed by the National Industrial and Commercial Investment Limited (NICIL) and its Special Purposes Unit (SPU).
NICIL/SPU has been mandated to ensure that GuySuCo is returned to profitability, and NICIL/SPU has wasted no time in accomplishing this assignment by firing GuySuCo’s long-time chairman, Professor Clive Thomas, and its board of directors, and replacing them with a new board, with Mr Heath-London as the newly appointed Chairman.
The track record of the newly appointed team suggests that they have little or no experience in formulating plans and executing policies to turn around an agriculture-based company in deep financial trouble and plagued with a host of diverse technical, management and agricultural problems. Nevertheless, it seems that the way forward for GuySuCo is still being determined, particularly with respect to the management of its three operating estates and privatization/leasing/selling of the assets of the remaining four.
Today’s prices show that sugar is being sold on the world market at less than US$0.14/lb, while it is costing GuySuCo an estimated US$0.40/lb to produce. To eliminate this differential and return GuySuCo to profitability, the cane fields will have to be converted for full-scale mechanization (which is not possible with the existing fields’ layout); improved cane varieties would have to be planted for higher yields of TC/TS; and there would have to be modernization of the manufacturing process and farming equipment for higher production and efficiencies. The existing acreage under cultivation would also have to be increased to reduce overhead costs.
Two major constraints among others have prevented GuySuCo from implementing programmes to return itself to profitability — lack of timely capital investments to upgrade and diversify its rundown facilities and equipment, and failure to train its personnel to acquire the knowledge and skills for diversified manufacturing. This was clearly evident at the Skeldon estate, where an ultra-modern factory was poorly operated and managed, while anticipated cane production increase never materialized to meet the factory’s designed processing capacity.
There was also the half-hearted attempt at field mechanization, and the failed diversification efforts at Wales after the estate had closed.
A loan of $30 billion being sought by NICIL to upgrade the three operating estates (Albion, Blairmont, Uitvlugt) with the intent of returning them to profitability is a ‘pipe dream’ for reasons stated above. SPU will be seeking a loan of about $15 billion to refurbish the four closed estates (Skeldon, Rose Hall, Enmore, Wales) to make them attractive for investors to buy/lease, as was recommended by NICIL’s consultant, PwC, based on the premise that to obtain premium prices for the closed estates, they should be presented to investors as going concerns, functional at both the field and factory levels.
This is likely to be a ‘no go’, as investors are aware of the Government’s dilemma and will be looking at the estates as ‘fire sales’, and then convert their acquired bounty of abandoned sugar lands into real estate development and other financially lucrative deals for quick profitable turnovers (as Houston/Versailles Estates have done) and avoid venturing into sugar manufacturing with limited or no growth and questionable profitability.
It is evident that the Government has lost its way, groping in the dark with no clear coherent plan to return GuySuCo to profitability, nor does it know how to bite the bullet and wind down the industry and find/create jobs for the laid-off workers.
Guyana’s Treasury cannot continue to subsidize GuySuCo indefinitely at the expense of other urgently needed national programmes. The adverse social and economic effects of laid-off sugar workers will sooner or later spill over into the communities at large. The growing crime rate in Georgetown and other urban areas with high unemployment clearly indicates what could happen when large segments of the society are unemployed/unskilled and are wandering around.
Yours faithfully,
Charles Sohan
