GUYANA: Uncertainty over GuySuCo assets as reopening of estates fade

…. as PPP/C’s dream of reopening shuttered estates fades

Mar 21, 2022- Kaieteur News – By Zena Henry

When the former A Partnership for National Unity + Alliance for Change (APNU/AFC) government decided to close four non- performing sugar estates in 2016 and 2017, the then administration decided to place the assets of Wales, East Demerara, Rose Hall and Skeldon sugar estates under the control of the National Industrial and Commercial Investments Limited (NICIL).

Severed GuySuCo workers received their severance pay and was given an additional $250,000 payout by the PPP/C government. Some observers say that the $250,000 may have been a “conscionable” payoff by the government given the difficulty it faces to reopen the estates and rehire the workers as promised.           

This information was also placed in the Official Gazette dated December 30, 2017. The order made under the Public Corporations Act, states that the title of property- property in this sense meaning all moveable and immovable property owned, used, leased or licensed by the Guyana Sugar Corporation (GuySuCo) or the state save and except Albion Estate, Blairmont and Uitvlugt Estate – shall, “… as from the appointed day, stand transferred to and shall be vested in NICIL absolutely, free and clear from all claims and liabilities.”

As companies wholly owned by the state, the order said that the state decided that it is expedient to vest the property, such as land, machinery, plant and equipment, motor and agricultural vehicles, furniture, tools, shares, residual rights, titles and interests among other assets to NICIL.

The then Finance Minister, Winston Jordan had said that government’s plan was to divest and privatise the non-performing estates that were bleeding billions of dollars from the industry. He said that numerous proposals to acquire the available sugar assets were coming in from local, regional and international interests and had suggested at the time that government’s plans were moving along.

However, just one year after transferring GuySuCo’s assets to NICIL, the then administration was hit with a no confidence motion that significantly changed the project’s business atmosphere. So much so, that it forced the then David Granger-led government to repay a $30B syndicated bond for the support of the remaining sugar estates, with proceeds from that very bond. Something Jordan had told the media had to be done since apart from the no-confidence motion, the then People’s Progressive Party/Civic (PPP/C) opposition was threatening to reverse transactions made or to take legal action relating to business conducted and that scared investors away.

Fast-forward today, all the assets of the closed estates are under the control of NICIL, and according to Senior GuySuCo officials, that means that the sugar corporation has no control over the assets. When Kaieteur News asked about GuySuCo’s role in relation to the closed estates the newspaper was told that “It is not our property. It is under the control of NICIL and so we do not own it.”

The newspaper was told by the sugar official that, “NICIL is owned by the state, GuySuCo is owned by the state so it was the state that transferred the assets of GuySuCo to NICIL. NICIL is a holding company that holds the assets of state companies on behalf of the state.” As the owner of both entities, Kaieteur News was told that a request was made by the government to have GuySuCo work along with NICIL in keeping with the administration’s promise to reopen the estates and develop the assets. The newspaper was told further that when it comes to spending, GuySuCo is paying for nothing at the closed estates and that, “all the spending is being done by government.”

This however leaves sugar stakeholders, particularly the thousands of severed workers in a peculiar position since now unemployed, the task of managing the closed estates is no longer with their old employer. General Secretary of the Guyana Agricultural and General Workers’ Union (GAWU) Aslim Singh told Kaieteur News that while he understands that some workers are currently employed with GuySuCo and engaged in various tasks, there is hope for better clarity on what would be happening at the closed estates. He said, “So far, nothing has been officially told to us though GuySuCo has workers on all the estates. It can be concluded that GuySuCo is actively managing the assets however at the end of the day whether the assets are under the auspices of GuySuCo or NICIL, it is ultimately owned by the Government of Guyana.”

“In terms of the future we have not been given an official indication of a diversion though we have seen media reports.” Singh said, “We have raised these with GuySuCo who we have a legal relationship with and they themselves said they cannot offer a comment.” However, what concerned the union even more, “…is that the workers are able to have decent jobs where they can provide for their families as the vacuum created by the (estate) closure was simply heart breaking.” “Whether such jobs are within or outside of sugar is not yet clear, but we did see a recent report arising from an interview with the Vice President (Bharrat Jagdeo) who indicated other ventures alongside sugar may be pursued though nothing at this time appears clear.”

Media reports have quoted both President Irfaan Ali and Vice President Jagdeo as touting crop production, land sale, and the diversification of business operations as means of turning around the closed estates. And while stakeholders seem not to have a clear idea as to what will happen to the closed sugar estates, reopening and rehiring the severed sugar workers remained a major selling point on the PPP’s 2020 election manifesto.

The estate closure by the APNU+AFC was deemed “heartless and unconscionable” by various sectors of the society to place some 7000 sugar workers on the breadline. It was this reaction that saw the PPP vowing to reopen the sugar estates. Two years later not one estate has been reopened and one of the closed estates has already been leased to a private company for non-sugar activities.

Very difficult
Economist, Ramon Gaskin has posited that the reopening of the sugar estates would be very difficult for government given factors such as the high sugar production cost to market prices, poor performing factories, lack of machinery and among other things, cost of reactivating the factories after such long closure period. Gaskin is adamant however that more questions must now be asked regarding GuySuCo’s assets, since he believes the company’s assets are now at the disposal of the government to do as they please. “More questions must be asked about this questionable (Enmore packaging plant) lease because the packaging plant, land and assets belongs to the company.”

Gaskin explained that as the Guyana Sugar Corporation Inc. the company is registered as a separate and legal entity under the Companies Act. He explained further that, “NICIL acts as a trustee holding shares on behalf of the government, but when it comes to the disposal of assets the government has no such authority.” The same could be said about other entities such as the Guyana Oil Company (GuyOil) and the Guyana Water Inc. (GWI) for example. Gaskin argued that the move by the former administration to place the closed estates assets under NICIL was an illegal one, since power is held by the Board of Directors of GuySuCo to handle the company’s business affairs. He opined that this has been part of the politicians’ way of intervening in GuySuCo’s affairs.

GuySuCo’s Chief Executive Officer, Sasenarine Singh has said however that, “More than G$80 billion in fixed assets, property, plant or equipment was lost between 2017 to June 2020 under the APNU+AFC.” “When I went to Rose Hall, there were zero moving equipment. I went to Rose Hall in September 2020. More than 80 billion in fixed assets were plundered.”

While Singh could not offer information regarding the leased Enmore packaging plant, the only closed estate to have seen some definite change since the closures, he said that government is planning to build a new packaging plant at Albion along with the expansion of one at Blairmont for 2022. He said it is part of a design to sell sugar at a higher value and to ensure the country has enough capacity to produce packaged sugar products for the international markets.

In the meantime, the less than 10 year old US$12.5m Enmore Packing Plant facility has been leased to a 52 percent Guyanese owned company for repair works to machinery in the oil and gas sector. The Rose Hall estate is now said to be reopening in 2023 as work there is around 51 percent complete with more than 1000 persons being recruited. As it relates to the 12-year-old US$200M Skeldon factory that never delivered, VP Jagdeo had said that investors no longer wanted to produce sugar there, and not much has been mentioned about what will happen to the other shuttered estates.

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Comments

  • Dennis Albert  On 03/24/2022 at 12:37 pm

    Jagdeo has to realise that he got voted in for promising to recreate the sugar boom of the early 21st century.

    The fishing industry is collapsing, construction requires semi-skilled labour, and many Region 5 and 6 communities where there are sugar estates do not have a housing boom, leading to high unemployment.

    This is where the PPP might lose votes.

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