Govt approves $3.8B for GuySuCo bailout, Minister instructed to find better sugar markets

Last Updated on Wednesday, 17 June 2015, 17:54 by GxMedia

by Zena Henry

The government has approved release of $3.8B out of the $16B that the Guyana Sugar Corporation (GuySuCo) has requested to keep it operational up to year end. Minister of State Joseph Harmon told a media briefing at the Ministry of the Presidency Wednesday June 17, that this portion of the request will be released immediately to ensure the satisfaction of the industry’s basic operational needs.

While government instructed that at least 60 percent of the money be repaid to the State purse, the Minister was also mandated, “to lead a drive to ensure that we find better markets for sugar and that the reliance on European Union EU market must be diversified.”

This is especially since for the remainder of the year the industry expects to continue its revenue-losing trend. Harmon said that that from now to the first week in August of 2015 the industry’s income is expected to be US$1.267M, but its expenditure is at US $5.07M creating a shortfall of over US$3.8M. From August to December this year, the industry’s anticipates a further loss with an income of US$13.056M, expenditure of $19.511M to give a shortfall of over US$6.4M.

Guyana sells at least 60 percent of its sugar to the EU, but with climbing prices in that market, the Minister said that, Cabinet was briefed on a number of countries where sugar is sold but it is believed that, “better and deeper appreciation” must be shown to those particular markets for better price since the EU prices are no longer so attractive. Guyana has for some time been producing sugar above the world market price; producing at around US$0.30 and selling at US$0.25.

To help improve the industry’s financial performance, Harmon noted that some changes were made and the corporation has been able to save “at least US$14,000 per month” in fees paid to people within GuySuCo, “who in our view were basically not doing anything much, and other fees to other officials which were not to be in the best interest of the corporation at this time.” Harmon mentioned that outside of the fired CEO and the GuySuCo Board, a PR consultant was laid off, some engineers of Indian nationality, “who were there and seemed to have been doing nothing much in relation to sugar. The combined effect of those two groups amounted to almost US$14,000,” he said.

Harmon also stated that the government was not prepared to give up on GuySuCo because of statements that suggest the saving of a damned industry. He said, “It is not something that you wake up easily; that affect the lives of some many; thousands of Guyanese people. Sugar is like the mother of the Trade Union and labour movement in this country.”

He said it is a decision the Administration will not take lightly. “We believe that once we are able to get the management and Board at a certain level, that we are able to get a fully fledged inquiry into sugar, at that point in time we will be able to make a decision and that will be assisted by the people of this country who will submit to the Commission when it has its hearings.”

The approved funds will see GuySuCo making a pre-financial commitment to paying off suppliers owed. It will pay wages, payments to NIS and payments to the GRA. Necessary supplies and other related items will also be purchased. For the remainder of the cash bailout, the Agriculture Minister will have to return to Cabinet and persuade them to release the rest with a report on the progress being made.