GOV’T’S FLIP-FLOP ON GUYSUCO CONTINUES

 

The APNU/AFC continues to be ambivalent in its approach to the sugar industry. While in opposition they bemoaned that the sugar industry is a “drain on the treasury”, that it is not “feasible” nor “viable”, that investing in sugar is pouring money down a “black hole”. Yet, in Government, they claim that they pumped 32 billion dollars into the sugar industry, as subsidies, between 2015-2017. By 2018, they have nothing to show for this massive financial injection into the industry. They still ended up closing five sugar estates and dismissing close to ten thousand sugar workers. The Clive Thomas Board at Guysuco must explain what use was made of this 32 billion dollars and what value did the industry yield from this massive monetary intervention; or, if this 32 billion dollars was ever injected into the industry as subsidies, in the first place, as claimed by the Government or, was diverted or stolen. The sugar workers and taxpayers as a whole, need answers to these questions. The story simply does not add up.

It is public knowledge, that all of Guysuco’s assets were transferred to the Special Purposes Unit, established by NICIL. No one has yet explained what is the status of Guysuco’s liabilities. Apart from monies owed to the Guyana Revenue Authority, the National Insurance Scheme, Guyana Water Inc, Guysuco owes billions of dollars to private contractors and suppliers. Guysuco also guaranteed loans at commercial banks for several private cane-farmers. Someone needs to explain how these debts are going to be liquidated. Some are the subject of pending litigation. This fact was known to Guysuco. Yet, the assets of Guysuco were surreptitiously siphoned away and placed in another entity, beyond the reach of these creditors. This is neither fair nor lawful. Genuinely acquired debts must be repaid. Some of these creditors are already on the brink of bankruptcy because of Guysuco’s refusal to pay them. This angle will have to be developed in another article.

From the outset, the PPP expressed its confidence in the sugar industry and its optimism about the industry’s long term future. The PPP has consistently called for a scientific approach to the sector, including, an impact-based assessment on the effect of closure, as well as a plan which relates to the future of the industry, including the necessary adjustments that have to be made at the level of management as well as operations, and inclusive as well, of a component which explores various diversification options. The Government continues to ignore this approach and prefers one that is adhoc and based upon the caprice and fancy of a few, without any input from the Opposition, or the trade unions, or the workers. This existing lack of transparency and rudderless strategy which is being pursued will only lead to greater problems.

The flip- flop approach to Guysuco produced, last week, a statement from the SPU which indicated that 30 billion dollars in the form of loans has been secured from commercial banks with, Republic Bank Limited, being specifically named. While I welcome the needed financial investment in the sector, I am deeply worried that the flawed model of financing coupled with the lack of transparency and a clear policy directive can result in untold damage to the long term future of the industry. No one has explained how the same industry which the APNU/AFC, claimed was not feasible nor viable, is suddenly now suitably qualified for a financial injection of 30 billion dollars. We need to know what has brought about this complete change of heart. These arbitrary paradigm shifts are indicative of a government that is absolutely lacking in policy guidelines and a defined macro-economic framework. It leads to the eluctable conclusion that the Government is managing the affairs of this nation on a day to day basis and without any discernable developmental plan.

fiduciary duty

It is reasonable to assume that since the monies are loaned from commercial banks, the terms of repayment and the rates of interest are not concessionary. I am informed that the massive asset base of Guysuco is being used as collateral security for this loan. Yet, there is no disclosure of what use will be made of this money, what objectives will be achieved by this massive financial injection and how this loan will be repaid. The nation is in the dark about these fundamental issues. It is impossible to conceive that the commercial banks would have approved the financing without being satisfied, based upon some plan, projection or feasibility study, that the venture has some likelihood of success. Why this very information which would have been presented to the bank or at least, a synopsis of it, is not being made public. The people of Guyana are the shareholders of Guysuco and those who are in charge of the management of Guysuco owe the shareholders this fiduciary duty. This is not a matter of political courtesy but of legal right. The news reports indicated that the monies are going to be spent to improve “infrastructure” at the estates. These patronizing generalizations are absolutely unacceptable. To date, no one has indicated whether a single worker will get back his job with this massive financial injection. It is to be noted that 30 billion dollars injected into the industry as subsidies, at a rate that it was done under the PPP administration, would have kept all the estates open for four years without a single loss of job. After the closure of five estates and with nearly ten thousand persons without a job and after a 32 billion input as subsidies by this Government, another 30 billion is being poured into the industry with no empirical data to indicate that the industry will be in any better position than it is in today.

My real fear is, that come next year, by this time, we would be told that the 30 billion dollars would have been expended but there is nothing to show for it and the banks will end up owning most of the massive asset base of Guysuco. As a consequence, future generations of Guyanese will be burdened with the task of repaying these humongous loans that the Government continues to pile up. It may be apposite to recall, that it was only in 2008, that Guyana completed the repayment of a loan taken by the Burnham administration in the early 70’s to construct a hydro-power plant at Upper Mazaruni which never generated a single kilowatt of energy. So, tens of thousands of Guyanese ended up paying for a loan taken even before they were born and from which they derived not a single benefit.

From the little that I have observed in the Press, I think that the head of the SPU, Mr. Colvin Heath-London means well for the industry. I take this opportunity to congratulate him for getting rid of the disastrous Clive Thomas Board. I humbly advise him to shy away from the non-transparent and capricious approach that he inherited from his predecessors and to adopt one that is accountable, consultative and premised on a plan that is, ultimately, designed to protect and secure the long-term future of the industry and its workers. If he does so, he would be assured of the Opposition’s support.


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