The first tranche of $1 billion (3.27 million euros or US$5 million) out of a total European Union grant of 89 million euros (US$135 million) has been made available to the Guyana Government, a release from the Delegation of the European Commission to Guyana said.

The EU support will assist the government in its aims to reform the sugar sector by upgrading Guysuco’s sugar factories, establishing a sugar packaging plant at Enmore, increasing total sugar production and mechanising Guy-suco’s field operations, to improve profitability.

The EU grant, the release said, is to also contribute to the mitigation of the potential negative social impacts of the sugar action plan.

Head of the EC Dele-gation, Ambassador Geert Heikens yesterday announced the release of the tranche.

The funding is part of the European Union’s funded Multi-annual Sugar Programme for the period 2006-2010 to support the government’s efforts to improve the competitiveness and viability of the local sugar industry.

The second disbursement of US$44 million is planned for 2008.

The funds come more than two years after the European Union decided that it would cut the price of sugar exported to EU member countries from African Caribbean Pacific sugar producing countries by 36%.

The price cuts took effect from July 2006 and even though the EU Trade Commissioner had given assurances that funding, referred to by the EU as “accompanying measures” would have been given in advance to alleviate the impact of the price cuts, none was forthcoming until now. The price cuts would be made over a four-year period.

According to the EC delegation release, the investment in the sugar industry is “necessary for a long-term and sustainable future for the Guyana sugar industry. It contributes to increasing the competitiveness and long-term productivity. The funds the European Union is providing through sector budget support and over a longer period to the sugar industry shows its commitment to this sector in Guyana.”