GuySuCo to spend $11b on key capital works

-GAWU says has much better idea of plans for industry

The sugar union GAWU today said that following a meeting with GuySuCo and the government’s Special Purpose Unit it has a much better idea of plans for the industry and was advised that the corporation plans to spend $11b in key capital works.

A statement by GAWU follows:

The Guyana Agricultural and General Workers Union (GAWU) was able to get a firmer understanding of plans by the Guyana Sugar Corporation Inc (GuySuCo) and the Sugar Special Purpose Unit (SPU) regarding the recently acquired $30B financing package. Following a request by the Union, a GuySuCo/SPU team engaged union officials and workers representatives from the three (3) GuySuCo estates – Albion, Blairmont and Uitvlugt – for over two (2) hours on April 19, 2018. Through the meeting, the Corporation advised that it is working on transforming itself from a sugar to sugar cane industry whereby it would move away from being largely a raw, bulk sugar producer to a state in which it will be producing several products and services as it seeks to diversify its revenue base. For the GAWU, this was pleasing news, as this is the direction the Union has been stressing that the sugar industry should go for it to realize its objectives of sustainable profitability.

The two delegations (GAWU photo)

Through the encounter, the GAWU delegation learnt that the GuySuCo will seek to expend some $11B on capital works at the estates under the Corporation’s remit. We learnt that over 70 per cent of that sum would be spent towards improving cane production and productivity through the purchase of machines; rehabilitation of drainage and irrigation infrastructure; fixed dilapidated bridges and revetments, and improving the condition of access roads. The GuySuCo expects that the investments will lead to improved cane quantity and quality and thus higher production of sugar. In terms of the factory, sums will be spent on improving factory performance and reliability through the replacement and rehabilitation of certain components. Some of the monies will also be used to improve storage capacity for bagged and packaged sugar.

Another set of monies is to be spent on the establishment of co-generation plants at Albion and Uitvlugt Estates. The company’s team advised that feasibility studies conducted have shown those ventures to be viable. On this matter, GAWU did advise the Corporation that there was need for a remunerative Power Purchase Agreement (PPA) with the Guyana Power and Light Inc (GPL). We did also ask the GuySuCo whether there were any assurances that the GPL would be willing to accept its electricity recognizing several other private enterprises have so far been unsuccessful in realizing their intentions of becoming electricity providers to the power company.

Even if that hurdle is overcome, the GAWU did share its understanding that the GPL’s grid may not accept all power that could be exported noting that currently all the power available for export from the Skeldon power plant in unable to be sent onto to GPL. Our Union did also question how GuySuCo’s intentions correspond to GPL’s plans taking into account the state-owned electricity utility to move in the direction of natural gas fired plants, which Minister of Public Infrastructure, David Patterson was reported in the media as saying was doable. The company’s team, did advise that these matters were not lost on them and that GuySuCo and GPL being both state-owned offered the Corporation a much better chance of becoming a power supplier to the electricity company more so given the existing relationship it has developed with the Skeldon plant. The GuySuCo/SPU team did also advise that the co-generation plants it is seeking to procure will be able to use a variety of fuel sources, including natural gas, and, therefore, their intent is to become a year-round supplier of electrical power.

Another major plank of the diversification involves moving into the production of plantation white sugar. On this, we learnt from GuySuCo/SPU, that a European Union (EU) funded study will soon commence and provide clarity regarding this area which we found a bit strange. The Corporation did share with the GAWU’s delegation that it believes this venture would be feasible pointing to the 180,000 tonnes per annum regional demand. We also learnt from the company, that the Belizean sugar industry has been successful in this area and there was little doubt that the situation would be different in the Guyanese context. Our Union asked about the possibility of the CARICOM Common External Tariff (CET) being applied to extra-regional white sugar. We were told that the regional sugar producers – Belize, Jamaica, and Guyana – were working together on this and expectedly soon a decision would be made. The company advised whether the CET is approved or not, it believed, it could be competitive in an open-market especially when account is taken of its other revenue streams.

The Corporation did share that it is looking at other possibilities but would be informed by what the numbers reveal. GAWU did accept while there may be need for improvement in the factories, there must be close and careful attention to what is taking place in the fields recognizing the criticalness of an adequate cane supply. Our Union strongly represented that there was the need for the involvement of the workers. We told the GuySuCo/SPU team that while it seeks to improve its fields and factories, which we welcome, at the same time, they needed to ensure that the workers remain committed and motivated as they represent, in our view, the most crucial link. The GAWU urged that there is need for more collaboration and the confrontational hostilities GuySuCo aimed toward the Union and the workers in recent times were not helpful to the industry. Our Union also told the company, that there was need for respect of our agreements, practices and norms which have prevailed for decades now.

GAWU did ask GuySuCo for a copy of the plan explaining that it would allow us to have a deeper appreciation of what it is seeking to accomplish. On this we were told that the plan is still being worked out but our input and views would be sought. While for us, this was a bit surprising, especially noting that funds have been secured, the GAWU strongly contended that there was need for a workable and realistic plan taking account of all of the factors and that it cannot be a mere collection of ideas and intents. We nevertheless are willing, if asked, to lend our voices and ideas towards having a plan that would see the industry recovering in the interest of the workers, the economy, and the country.

We also did use the opportunity to raise our concerns with the seeming intent to contract out sections of the workforce engaged in drainage and irrigation works. The company did inform that this was neither their intent nor objective. They did advise that given their experience in this regard they have commercialized their drainage and irrigation services offering it for sale to the Government and other interested persons. The company disclosed that it has reached an agreement with the National Drainage and Irrigation Authority (NDIA) wherein it would be paid to maintain and operate the drainage and irrigation services at the estates that were closed. In other words, those workers undertaking drainage and irrigation tasks would continue to remain employees of the sugar company. Moreover, those employees of the closed estates who were retained to operate the drainage pumps and sluices would also remain GuySuCo workers. Preference will be given to redundant employees who wish to be contractors of the extended drainage and irrigation network. The Corporation also did inform that at its operable estates it may employ contractors to execute works which it may lack the capacity to undertake. Our Union will continue to exercise vigilance to ensure that the Corporation’s undertaking is upheld.

The meeting, we believe, was informative and helped us to draw a firmer understanding about what the Corporation is seeking to accomplish as it seeks to become profitable in the not-too-distant future. While pleased about what we are told, we must express our concern that a firm plan is still not available. We never-the-less remain committed to good faith discussions and exchanges as we share a common goal to put the sugar industry back on the right track. In the meantime, we have requested from GuySuCo/SPU copies of the relevant studies which are guiding its investment decisions and overarching goals. We hope that our request would be positively considered and allow us being able to get a better grip of what really would be done.

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