The European Union (EU) has released the remaining of its GY$348.5B grant to Guyana for sugar sector reform at a time when the government is moving to privatise the industry and the world-market price for the commodity has tumbled.
This was disclosed by the EU Ambassador, Jernej Videtiè during a press conference today to reaffirm its commitment with the Guyana Government.
The last funds were disbursed in October 2016 to the tune of GY$5.4B.
Ambassador Videtiè noted that the monies are for sugar sector reform and not policy design.
He explained that the government, throughout the years, has made laudable progress towards the reform of the sugar sector, hence the continued disbursement of funds.
The Ambassador said, as with all of the EU’s budgetary support programmes, the monies were released on a post examination basis.
This means, if the government had not achieved any progress towards sugar sector reform, the monies would not have been released.
The EU had, some years ago, set aside 1.2 billion euros to assist the African, Caribbean and Pacific (ACP) countries to reform their sugar sector in order to improve competitiveness or to diversify out of sugar.
This decision was made after the EU abolished the preferential pricing system at which it was purchasing sugar. As a result, Guyana has been benefiting from the disbursements since 2006.
In Guyana, there has been much talk about the future of the sugar industry given its dire financial state and inefficient management practices.
With an over GY$300B investment from the EU for sugar reform, the government appears to be keen on privatising the industry which employs thousands of Guyanese.
So far, government has already received a few expressions of interest – one from an Indian company and another from a Trinidad and Tobago firm.
According to a news report on an online news agency, there are other major international companies that are also showing keen interest in investing in the state-owned Guyana Sugar Corporation (GuySuCo).
United States-based investment broker, Wesley Kirton, who was hired by the government to search for investors, said business executives have already visited Guyana to further explore their interest in the sugar sector.
Meanwhile, the search for investors comes at a time when the world-market price for sugar just plummeted to US 12.66 cents per pound.
GuySuCo supplies 65,000 tonnes of bagged and packaged sugar to Caribbean and local markets annually. Another 12,000 tonnes of raw sugar is supplied to the North American market while the remainder which is also raw sugar, is sold on the European market.
The supply to Europe for the Second Crop 2017 will total some 70,000 tonnes.
The current forecast is that there will be a surplus of sugar on the World Market for the marketing year 2017/2018, GuySuCo said.
Also, from 1st October 2017, the European Union (EU) market will also see some radical changes since it is anticipated that significant additional amounts of beet sugar will be available for sale and this will compete directly with cane sugar.
The Corporation noted that this may result in reduced sugar prices in Europe.
“Due to the competition with beet producers, the price paid by the refiners for raw cane sugar (as supplied by GuySuCo)will be more in line with the World Market Price, which currently is trading at US$275 per tonne and the forecast is that it will not increase significantly in the near future,” GuySuCo outlined.
The price at the commencement of the year was US$396 per tonne.
The state-owned organisation has noted that the anticipated lower prices for the sugar sold will not assist its fragile financial position and poor liquidity will continue to pose a serious challenge in the upcoming Second Crop.