Top In’tl financial firms bid to calculate GuySuCo’s assets
Four of the world’s leading financial services firms have put in bids to evaluate the assets of the Guyana Sugar Corporation (GuySuCo) as the government looks to diversify the troubled industry and keep jobs.
The government has set up a Special Purpose Unit (SPU) to manage the divestment of GuySuCo.
In a statement Monday, Colvin Heath-London, the head of the Unit announced that bids were put in by PricewaterhouseCooopers, Ernst & Young, Deloitte and KPMG.
The selected firm would conduct a valuation of all assets under the control of GuySuCo, in addition to other advisory and financial services.
“An award should be made within two weeks,” the SPU stated Monday evening. It is expected that the valuation of the assets and the preparation of a prospectus will be completed by the end of January 2018.
Health-London said that while the sugar industry should continue to form part of the country’s economic mix, how this happens will depend on “a combination of options for the existing assets involved in sugar production.”
The plan ahead, he noted, includes selling off some of GuySuCo’s assets and using what remains to get into other profitable enterprises. The Corporation is already engaged in the cultivation of rice on lands once used by the Wales Estate, where production has ceased.
Advertisements have been placed for Expressions of Interest (EOI) in the sugar factories and estates. The deadline for the EOI has been extended from November 3 to November 24, 2017.
Heath-London suggested that companies that are engaged in rum production, other beverage manufacturing, and food processing, would be ideal as potential operators of some of the current GuySuCo assets.
He said that while factories could be sold to potential operators and investors, lands will not be sold but could be leased so that they remain the property of the state.
“The approach being taken by the SPU seeks to tackle the economic problems of GuySuCo while finding ways to defend the jobs in sugar, and to ensure that the culture and history of sugar in Guyana would be protected,” he stated.
He noted that sugar lands and sugar factories are not the only assets under GuySuCo’s control.
“For decades, GuySuCo was tasked with providing and/or managing a wide range of other assets including community centres, sports ground and other recreational facilities, primary health care facilities, drainage and irrigation networks, and water conservancies,” he stated.
In addition, it was noted that GuySuCo is critical to national drainage and irrigation activities which are critical for the agriculture sector. All of these all-important social, economic, and infrastructure obligations were provided by GuySuCo at the expense of profitability, it was noted.
“As an example, the fortunes of GuySuCo had an impact on cricket, horse racing, swimming, athletics, and cycling. The effects were felt by entire communities and not just sugar-workers’ families,” the statement from the Special Purpose Unit noted.
“Many of these other properties will be either privatised, divested or otherwise placed under different management arrangements,” it stated.
By 2020, GuySuCo aims to reduce sugar production to just three factories and with 10, 000 workers, which would be 6, 000 less workers than it currently has. Most of the Corporation’s revenues have gone to pay wages and salaries.
At the end of this year, GuySuCo’s revenue would amount to about 17.4 billion dollars; all of that, and an extra 1.1 billion dollars would account for salaries alone, minus the billions needed to cover other expenses.
To fill in the gaps over the years, the Corporation has been bailed out by the State – an incredible $32 billion over the last three years alone.
The Corporation sees itself being able to produce 150, 000 tonnes of sugar annually in the next three years from the estates that would be kept in operation – namely Albion and Blairmont in Berbice and Uitvlugt, West Coast Demerara.
The operations at these factories would be able to meet the demands of markets locally, in the Caribbean and further afield. In addition to selling raw sugar, the Corporation is looking at value-added sugars and providing electricity to the national grid through co-generation.
For the workers who are being made redundant, GUySuCo is trying to interest them in taking off some of its jobs, such as transportation, for which it currently spends over 1 billion dollars. It has lands also available to sell to farmers to get involved in various agricultural projects.
The Corporation is also re-training workers in various skills to pursue other jobs.