With GuySuCo’s four shuttered estates on the market, recently-appointed Chief Executive Officer (CEO) Dr. Harold Davis says the remaining three will be opened to partnerships with private businesses as its management believes that plans to supply white sugar and green energy make them lucrative investments.
“The three estates we have are open to investments by investors. There is nothing that says that GuySuCo must remain a state entity,” Davis told Sunday Stabroek.
“Private partnership is good for any business. It changes the perspective. State-run things have different drivers but private partnerships bring in a different kind of broad thinking,” he added.
He said investing in the three estates would not be risky, even if the other four go to other private investors, as there is the demand in the region for white sugar and this country’s CARICOM membership gives it preferential access to the regional market.
“From Albion, we have a very good price for the brown sugar, both in Guyana and externally. We need to keep that market. All we have done is taken three of the estates away. There still is a need. That three hundred plus sugar that we used to produce used to be sold somewhere. Think about it like that. We are not competing against ourselves. I think the market is there. There is no reason why the other companies who buy these other four sugar estates can’t operate in the same [market]. It is good that other people are coming. I was part of the [Commission of Inquiry] and our recommendation was that all be privatised,” Davis said.
“We envisioned Albion to be a white sugar producer, because this region, as a whole, imports about 200,000 tonnes of white sugar. We can’t afford to send raw sugar to Europe anymore because the price we get is very, very low. We think the market we are looking for is direct consumption sugar and the white sugar for export. Providing we can get 70% of the white sugar market that is used within the region… We can take the market and get a price that is attractive,” he added.
Months after the APNU+AFC government ascended to office, it announced the restructuring of GuySuCo, which it said had become unprofitable in its then form. Billions had been pumped into beleaguered corporation for many years with little development to show for the investment.
Contending that it was impossible to make sugar production at four of seven estates viable, it was argued that closing them would allow improvements to be carried out on better performing estates. A decision was made to keep only the Blairmont and Albion estates in Berbice and the Uitvlugt estate on the West Coast of Demerara.
Government later established a Special Purpose Unit (SPU) within the state holding company, NICIL, to spearhead the divestment and privatisation of certain GuySuCo assets for the Skeldon, Wales, Enmore and Rose Hall estates.
Additionally, PricewaterhouseCoopers (PwC), which was contracted by the SPU last year, began doing valuations of the assets of GuySuCo in order to better inform prospective investors. That process is almost complete and government recently announced that it has received over 70 letters of interest, with a few companies also stating their interest in purchasing all seven estates.
But government’s decision will have to await PwC’s valuation. Head of SPU Colvin Heath-London had said that PwC’s work “will help all decision makers to arrive at the best decisions for the assets of GuySuCo, for other businesses that are in the GuySuCo supply chain, and, most importantly, for the workers who are uncertain about their future.”
The quicker the resources are given to GuySuCo, the faster its revitalisation plans could begin and attracting investors could be easier, the new CEO believes.
“If you are going go to into a big project like co-gen, which requires big factory engineering, there is no reason why we shouldn’t have a partner…we have to get equipment and all the other resources we need to modernise ourselves. We have to do that, hopefully with the investment [from SPU] and others,” he said.
Speaking on co-generation plans, the new CEO said he hopes that there would be enough power to supply the national grid and he said he believes that it would not conflict with government’s own plans to bring natural gas to shore for local consumption.
“Co-generation is green energy. I am not so sure that you can bring natural gas in 200 miles in two years. That is a massive project. We haven’t even started producing the oil yet, so I guess it will take more than two years. The co-gen is something that we have the ability and technology to do once we get the resources. Is it not that we have been doing all the time? So it is just a matter of engineering our factories to do so on [a larger scale]. We are not competing and I don’t think it will be a conflict,” Davis noted.
“Guyana doesn’t have any industrial development. I would dare say that with oil and all these things, there would rapid industrialisation and there is going to be need for all sorts of power. In the United States, they produce billions of barrels of oil and there is still a place for green energy, so there is no reason I can say that we will be competing with natural gas for anything. There is a place for plants, such as the sugar factory, and, again, I say it is green energy. I don’t see any conflicts as far as that is concerned,” he added.
Davis explained that each factory currently is a co-generation facility and part of the revitalisation plans is to ramp up the scale of power production so that the power could be sold. “When people talk about co-generation, they don’t seem to get this but sugar factories power themselves. When you see how a sugar factory operates, bagasse and steam generated, you would know that it provides electricity for factory, the houses, pumps… everything around it,” he explained, while adding that depending on the feasibility and the price it would get for the surplus power generated, it could supply the national grid.
“Our long term plan is to make the process of producing cane as efficient as possible and to create as much value-added as possible for each production facility. We have a plan for Albion, a change in the power mix, we have a plan for Blairmont and once we have that we can, with increased power generating, and we can go into co-gen. I expect all the factories to be exporting some power, the question is when. We think we have the people and the incentive to do that… so, again, no conflict,” he added.