Commentator Christopher Ram says another round of bailouts for the Guyana Sugar Corporation (GuySuCo) is unsustainable.
Turning around the phrase used by several that GuySuCo was too big to fail, Ram said he was now even stronger in his conviction that the corporation was too big to save.
He charged that the problems of GuySuCo had been allowed to fester for too longer and expressed the hope that the new government’s planned Commission of Inquiry would begin its work before another bailout tranche is considered.
Writing in his blog at chrisram.net, Ram said that there was no indication whether the $3.8 billion tranche announced is tied to any project, activity or otherwise, such as the payment of any debt obligations.
“Whatever the eventual bailout number will be, it is likely to be huge. Yet, the Granger Government could not risk a shutdown of the industry. Whether as the sole shareholder in GuySuCo, or as the Government, there had to be some decisive intervention. That however, does not make the circumstances any more comforting”, Ram said.
The APNU+AFC government was forced into the announcement of the bailout after the corporation’s now fired CEO Dr Rajendra Singh said that $16b was needed otherwise the industry would have to be shut down.
Arguing that GuySuCo is more than just a corporation, Ram said that its knack for stealing the headlines for all for the wrong reasons has caused the significance of private cane farmers to be understated.
“Much of the Skeldon expansion project was centred around private cane farming, but the ill-fated “modern” factory built by the Chinese has been far from helpful to them. Private cane farmers also play a major role in the West Demerara estates and it is of some significance that they make money while the estates themselves make huge losses”, Ram said.
He noted that GuySuCo also has a huge role in the economy: it has the largest number of employees, is a significant foreign exchange earner, plays a big role in rural Guyana and maintains a network of drainage and irrigation vital to the coastal belt
“But that is one side of the coin. The other is the parlous and deteriorating state of the Corporation which ironically has been aggravated by what were supposed to be initiatives to address the problems. In a six-part series on the corporation I published on my blog in 2010, I referred to the quixotic turnaround plan prepared by the Board. I predicted that it would fail.
And fail it did. In response to the assurance by then Agriculture Minister Robert Persaud that GuySuCo is too big to fail, I offered a different view: that GuySuCo is too big to save. I am even stronger in that conviction”, he stated.
Ram said that despite the decision to inject the $3.8 billion into the company, there is no hard information on its current state or the losses it has incurred since 2009 when its last set of financial statements were laid in the National Assembly.
He noted that in July last year, then CEO Paul Bhim told the Economic Services Committee of Parliament that GuySuCo’s debt stood at $58 billion, which would no doubt be higher now, even after a $6 billion from the national coffers last year.
“The problems of GuySuCo have been allowed to fester for far too long. The obvious requirement of a restructuring of the company was not only unpalatable, but no politician seeking votes could ever mention the inevitable necessity. And so the Corporation has moved from being an irritant, to a problem, to a burden and now a millstone.
“We have been bemused into the mantra that not a job must be lost, even if it means that the workers will never be relieved of the uncertainty about their future employment, that they can never hope to enjoy real earnings increases, that they should not seek other and better opportunities. Or that persisting with that fallacy is at the expense of the rest of the economy”, Ram asserted.
He said that President David Granger understandably needs to be even more cautious than his own conservative style would suggest.
“Not only does he have to have regard to the need to avoid confrontation with any segment of the electorate at this early stage, he is also acutely aware that his main coalition partner the AFC had sought to court sugar workers with their own promises.
The idea of a Commission of Inquiry is not bad but it must be appointed and begin its work very, very soon. And, hopefully, before another bailout tranche is paid over”, Ram said.