GuySuCo gets $2B
Chief Executive Officer (CEO) of CH&PA, Lelon Saul
Chief Executive Officer (CEO) of CH&PA, Lelon Saul

…for lands sold to CH&PA

THE Central Housing and Planning Authority (CH&PA) on Thursday advanced some $1.1B to the Guyana Sugar Corporation (GUYSUCO) for the sale of approximately 2000 acres of lands as the company seeks ways to meet revenue shortfall.

The advanced payment to the ailing sugar company follows the submission of a report by GUYSUCO to Cabinet on its finances on Tuesday. The report which was submitted to Minister within the Ministry of Finance, Jaipaul Sharma, detailed the entity’s cash-strapped scenario. Speaking with Guyana Chronicle, Chief Executive Officer (CEO) CH&PA, Lelon Saul confirmed that his entity is to pay out to GUYSUCO some $2B by tomorrow ($1.1B plus $0.9M) for lands located in Regions Three, Four, Five and Six.

“We have advanced GUYSUCO some money…$1.1B…we are still to identify the location of where we want the land…we have not identified the exact locations,” Saul said while noting that an aerial reconnaisance of the identified regions will be done to ascertain the lands purchased. “After the aerial recognizance, we will indicate to GUYSUCO which lands we want,” the CH&PA head told Guyana Chronicle.

Meanwhile, Minister of State, Joseph Harmon on Thursday during a post-cabinet press briefing told reporters that Cabinet considered the report and authorised that Minister Sharma assists the management of GUYSUCO with the ongoing discussions with the CH&PA to finalise the sale of the lands and to facilitate payments for same to GUYSUCO urgently.

Over the years, the cash-strapped sugar company has called on government to bail it out from its financial strain and government in turn heavily subsidiszed the company’s operations. Only recently, the Minister of State said, GUYSUCO requested from government $2B as part of an emergency intervention but government in turn advised the entity to sell its lands to CH&PA. While accepting that GUYSCUO will need additional sums by the end of the year, Minister Harmon said his administration will examine that, when the time arises. Since taking office, the APNU+AFC administration has explored several avenues to attract new markets and possible investments.

GUYSUCO had requested G$18B from government for the year and thus far government has presented a number of alternatives to keep the corporation afloat. Those alternatives include diversification of its activities which have been shared with stakeholders. Back in May, the government said the future of the sugar industry here lies in a smaller sector, with reduced losses and cash deficits but coupled with a separate and profitable diversified enterprise, which would ensure a viable future.

Agriculture Minister, Noel Holder in making public a white paper on the future of sugar, said focus will be placed on poorly-performing estates and have them shift from sugar to diversification. It was proposed that the Skeldon Estate be divested as significant investment was made in the new Skeldon Factory, which this far has experienced a plethora of technical problems.

It has failed to achieve its potential, thereby failing to generate returns on the investment and the Corporation does not have the resources required to correct the technical problems. It owes in excess of G$29 billion in loans due for the Skeldon Sugar Modernisation Project.

Funds generated from the divestment of Skeldon Estate will go towards reducing GUYSUCO’s debt and supporting its capital programmes for both sugar and the diversification initiatives. Minister of Agriculture, Noel Holder had said that the industry’s contribution to the Gross Domestic Product (GDP) changed between 2006 and 2015.

“The industry has not been able to keep a pace with the changes that have occurred in the economy since 2006,” he told the National Assembly when he presented the White Paper. The sugar company incurred $40B losses with sales of $230B from 2008 to 2015. By 2015, management of the company had accumulated a mere $11B in internal equity and had decreased working capital by $25B. It meant it spent eight cents of every $1 of sales to build its long-term investment base, while generating only five cents of internal equity to do so.

“GUYSUCO was forced to finance its long-term investment by borrowing money and by relying on subsidies through the national treasury, even though all the internal equity was being put back in the business,” the Minister related, as he noted that the sugar industry currently lags behind mining, construction and rice in its contribution to the local economy.

“The contribution of the industry is no longer as distinguishable as it was before. Sugar, as a result, now finds itself competing with other agricultural crops and forestry in its contribution to the economy,” Holder added.

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