Govt to borrow $15B to reopen Skeldon, Enmore estates

…says privatisation proceeds from sale to repay bank loans

By Samuel Sukhnandan

As part of plans to temporarily reopen two sugar estates, Government has now made a decision to borrow over $15 billion which it hopes to repay over the next three to five years.

Finance Minister Winston Jordan said on Wednesday that money will be used specifically to fund the operations of the Skeldon and Enmore sugar estates, which is likely to reemploy some workers.
In defending the decision to separate the estates’ operations from the Guyana Sugar Corporation (GuySuCo), the Minister said the plan is to keep them operational as it searches for buyers.
PriceWaterhouse Coopers is conducting a valuation exercise of GuySuCo’s assets. The British company is helping the National Industrial Commercial and Investments Limited (NICIL) to prepare for buyers.
But estates will not be opened for one month according the Jordan, but could possibly be opened for several months. He noted that the idea is to close deals in another six to nine months.
“If it is closed and moth-balled and buyers come, they probably are not going to be impressed as if they were working and seeing the estates are valuable properties to be acquired,” he told the media.
Shifting his attention back to the process by which the Government hopes to acquire this loan, Jordan said the loan to fund the operations of these two estates should be acquired before mid-March.
He also declared that revenues generated from the sale of estates and other assets would be used to repay the loan. The Government will be turning to commercials banks for this syndicated bond.
“These estates potentially are not going to be producing sugar per se or the kind of volumes that you know. It’s going to do some molasses. There is an interesting model for Enmore prior to its complete diversification and that will be involving hopefully DDL (Demerara Distillers Limited),” Jordan explained.
Jordan again defended Government for the move to close the estates and to temporarily reopen them. He said it would have been a difficult task to keep them opened, because of the day-to-day expenses involved and still meeting other obligations, including a huge wage bill.
He explained that the reopened estate will operate on a smaller scale when compared to the previous years. According to him, this also sends a good signal to potential buyers.
“Here, you pull them away from GuySuCo; you try to make them efficient and so on. The balance sheet looks better and the attraction to the investor is different plus these are now separate entities as opposed to be one global family under the GuySuCo arrangement,” the Minister added.
It was reported in sections of the media last week that the Skeldon and Enmore sugar factories are expected to be reopened by the end of March to reap over 300,000 tonnes of sugar cane.
The Special Purposes Unit (SPU) will also use the reopening of these estates as an example to prove to potential investors that all of the estates are viable. But Opposition Leader and General Secretary of the People’s Progressive Party/Civic (PPP/C), Bharrat Jagdeo, said this now proves Government’s move to close sugar estates was purely political.
Jagdeo said, “The Government must admit it made a blunder, it treated the sugar industry in a political fashion when they should have done more technical work, we called on them to do the technical work, they never did, they made the wrong decision and once they admit that, then that’s fine.”
As part of plans to reopen these estates, some of the already retrenched sugar workers will be reemployed to assist with harvesting canes. It is not clear why the Government took the decision to retrench workers, when they were aware that 300,000 tonnes of sugar cane was still to be harvested.
Jagdeo said it was an illogical move that has no basis for the reality on what is taking place on the ground. “We need to understand what the thinking of this Government is. Do they sit down and go through the numbers first before it makes a decision as critical as the one it did, to close an almost 300-year industry. In three years’ time, they have practically shut down half of the industry.”
The downsizing of the sugar industry has been fiercely resisted by the Guyana Agricultural and General Workers Union (GAWU), the parliamentary Opposition and a number of other agencies.
Some 4000 sugar workers from Enmore, Rose Hall and Skeldon were dismissed from their jobs.