What is the real reason for the proposed sugar estate loan?

Dear Editor,

The Guyana Chronicle, which is the state-owned newspaper, on February 22nd, 2018, reported under a caption which reads, ‘$15 billion to reopen estates’ and that, ‘Gov’t seeks funds to restart operations at Skeldon and Enmore’ according to Finance Minister Winston Jordan.

Now after many criticisms from the public, the Finance Minister has changed his tune, not unlike the US$18 million signing bonus. An official from the Ministry of Finance has stated that, “I can confirm to you that the Minister was misunderstood. The finance being sourced is for the operations of GuySuCo and its three estates ‒ Albion, Blairmont and Uitvlugt ‒ it has nothing to do with the four closed estates. This is being handled separately”. If this is so then how come the SPU is involved in the negotiations of the $15 billion loan from the commercial banks? The SPU is involved in the preparation for sale and the sale of the closed estates and not the operational estates. The closed estates are separate entities. Albion, Blairmont and Uitvlugt are still run by GuySuCo and not NICIL.

Furthermore, Minister Jordan was reported to have said that the revenue from the sale of the estates and land will be used to repay the proposed $15 billion loan within 3-5 years. He stressed that, “This will be a government debt, so that when we get a buyer we will service the debt”. When this is evaluated from the statement made by the same minister that there is a new model of operations which will make GuySuCo more ‘cost efficient’ and therefore profitable it leaves us in a quandary as to the real reason for the requirement of the proposed loan to finance existing operations at the three estates. Why not use this ‘model’ on the three estates?

It is also reported that 30,000 tons of canes will be harvested at Enmore to produce sugar for DDL. Let us do a simple calculation about the revenue factor. At a TC/TS of 15, it means that 1200 tons of molasses will be produced with 2000 tons of sugar. This should bring in an approximate income of $19.5 million from molasses and $212 million from sugar sales at US$500 per tonne, a total income of $231.5 million. However, if all the canes are utilized for molasses purposes only, then approximately 4500 tons of molasses will be produced at a local market value of $73.3 million. A loss of approximately $158.2 million will result. Is the government actually financing DDL? How will this bring profit to GuySuCo? In addition, we need to be given some estimates and some hard facts by the Minister of Finance how the injection of $15 billion will result in profits? Not a figment of his imagination?

We have been exposed to voodoo economics by this coalition government for too long.

Yours faithfully,

Haseef Yusuf



Region 6

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