-$750M more to be released soon
THE Guyana Sugar Corporation (GuySuCo) received a much- needed bailout of $250 million from the National Industrial and Commercial Investments Limited (NICIL).
In a letter to President David Granger on May 15, Chairman of GuySuCo’s Board of Directors, John Dow, had said the sugar corporation was in a “dire financial crisis” with billions in debt, and insufficient finances to execute critical factory maintenance.
The Ministry of Finance in response to GuySuCo’s request for a bailout, had cited a $30 billion bond backed by NICIL’s assets and guaranteed by the Government of Guyana, which was secured through NICIL to retrofit and revitalise the three remaining sugar estates.
It is to this end that NICIL disbursed $250 million to GuySuCo under the syndicated bond. The funds were transferred to GuySuCo’s account, on Wednesday. “This sum represents a partial response from NICIL to GuySuCo’s request to government for a ‘bailout,’ and brings the total disbursements to GuySuCo from July 2018 to date to $9, 970, 759, 568; in addition to the close to 40 billion it has received from the government,” said NICIL.
NICIL, however, reminded GuySuCo that it should seek to resolve its financial challenges through professional engagements with the investment company and by extension the Government, rather than resorting to “petty disclosures” and “half-truths” in the press; none of which is providing the solutions to its myriad of problems.
“We strongly advise the Directors of GuySuCo to obey the terms and conditions of the bond and to seek to ensure compliance with same. In particular, we urge that it honours the reporting of its expenditure schedule to NICIL and the bond holders,” said NICIL.
NICIL will, in the “very near future,” make available a further G$750,000,000. This disbursement can only be possible when NICIL and GuySuCo engage in solutions-driven discussions about making GuySuCo a commercially viable entity.
Just Wednesday, the Stabroek News reported that there appears to be active consideration to bring the operations of GuySuCo to a halt and as a consequence layoff thousands of workers.
The Guyana Agricultural and General Workers Union (GAWU) has since dispatched a letter to the Corporation’s Chief Executive Officer (CEO), Dr Harold Davis, seeking clarification on the report appearing in the media.
GAWU remains hopeful that the situation could be averted but holds that meaningful assistance could only come through the installation of a legitimate government, a product of the will of the Guyanese people.
GuySuCo has, however, been in financial turmoil for years, and according to Dow, in his recent letter, “despite improvements in the productivity of cane, GuySuCo’s sugar production for the last two crops has fallen short of expectations and the current COVID-19 pandemic has exacerbated the problems experienced in meeting the 1st crop 2020 production targets…As a result, the cash generated from operations cannot meet the ‘outgoings’, particularly when external funding has been difficult to obtain.
In referring to the condition of the sugar corporation, President Granger had said, “it is very unfortunate we are in this position. Throughout the tenure, we have been engaged in trying to resolve the issue of the industry.”
In executing its plan to resuscitate the industry, President Granger said government had to make “hard decisions,” which included the retrenching of workers. But, despite the scaling down of the industry and provision and future provision of government bailouts, the President said there is no guarantee that the corporation could produce sugar at world market prices and function economically.
“We have done everything possible to return the industry to normalcy and even profitability…we will continue to help and not send anybody home…we want an efficient sugar industry which can produce sugar at competitive prices,” said President Granger.
The idea is to compete with Brazil, Cuba and other “heavy” sugar producers, but in order for Guyana to do that, the industry needs to be economically viable and feasible.