GuySuCo says no cash to run estates

…yet Govt sits on $30B bond borrowed against sugar assets

The Guyana Sugar Corporation (GuySuCo) has run out of cash to meet basic expenditure such as the payment of salaries, maintenance and bare essentials. The corporation is also $2.1 billion in debt without any sign of funding in the near future.

Compounding the situation is the fact that contractors that usually provide goods and services for the corporation have now begun demanding upfront payment before any supplies are given to the industry.

The state of affairs was communicated to caretaker President, David Granger by Chairman of the Board of GuySuco Directors, James Dow.

The Chairman has since penned an urgent appeal to the President “on behalf of the Board, to use your good offices to arrange for funding to prevent the impending closure of the industry.”

Dow in his missive to the Administration also reminded that without an imminent cash injection into the corporation, the effects of its now stagnant cash flow would affect the second sugar crop.

The GuySuCo official has since indicated to the President that the corporation has only ever received just about $9.7 billion of the promised US$30 billion that was secured for the industry by the Government-run National Industrial and Commercial Investments Limited (NICIL) – Special Purpose Unit (SPU).

According to Dow, recent interactions with the intermediate body—that was placed in charge of large aspects of the corporation’s management—have revealed that “little or no further funds are likely from this source in the near future.
Additionally, the Chairman noted that the corporation’s business plans call for investments in critical equipment and infrastructure works to secure the future of the corporation “and these cannot be sourced from the cash generated operations.
He indicated to the Administration, in a letter on May 15, last, that the entity only has enough cash to last up to this week.
As such, the Administration has since been informed that “that cash will not be available to meet any outgoings for spares and materials for the mid-year out of crop maintenance of our factories.”
Additionally, it was noted that the inability to make the needed purchases will likely affect factory performance and inherently lead to increased factory downtimes, and reduced sucrose extraction at the milling plants in addition to lower sugar and molasses production.
Compounding the situation, according to Dow, is the backlog of some $21 billion owed to GuysuCo creditors.
Elaborating on the sugar industry’s predicament, Dow notified the President that it is unlikely that the company’s creditors will extend the facility further and that “indeed our inability to pay creditors in time has resulted in many of our most experienced contractors being unwilling to tender for GuySuCo projects.”
Speaking to the previous Government interventions that should have been birthed, Dow in his outreach to the Executive reminded that the Administration’s plan’s for the industry was contingent, in part, on the sale of 4650 acres of land. This did not obtain.
Additionally, Dow noted that the creation of the NICIL-SPU saw the issue of a $30 billion, “which to our knowledge, only $17B has been raised to date.”
Dow lamented too that proceeds from the sale of GuySuCo lands by the NICIL outfit never saw that money being remitted to the sugar corporation.
He noted further that additionally, the NICIL outfit has also been selling off GuySuCo’s assets from its now-closed estates such as scrap iron, punts, and tractors among other assets, only to be told that the monies being raised are being used to repay the bond but with no corroborating accounting.
Dow has since requested of the Executive, an immediate provision for a subvention, acknowledging that the next annual budget for the country is still some months away given the prevailing political state of affairs.
The immediacy, Dow pointed out, is rooted in the fact that the corporation is without cash to carry it past the second week of this month.
He noted in the missive to the President that the financial situation at GuySuCo is so dire that two accountants on the corporation’s Board have since resigned.
The People’s Progressive Party (PPP) has long criticised the coalition Administration for going ahead and closing the sugar estates without any fact-based approach which included a socio-economic impact study that was recommended by a Commission of Inquiry (CoI) set up by this Government. Thousands of sugar workers were fired by the APNU/AFC Administration in what they called a ‘downsizing’ of the industry. The estates closed were Enmore, Rose Hall and Skeldon, in late 2017. In 2016, the APNU/AFC Administration closed the Wales Sugar Estate. Retrenched workers, most of whom were breadwinners of their families, are still struggling to find a steady job.