Agriculture Minister Christopher Tufton(left) gestures while making a point. Beside him is permanent secreatry, Donovan Stanberry. - File

The state-owned Sugar Company of Jamaica (SCJ) continues to rack up huge losses even as a failed bid to offload the ailing entity to Brazilian firm, Infinity Bio-Energy (IBE) since last year, has now forced the Government back to the divestment drawing board.

If a new deal is not inked soon, the public purse will be called on again to plug a projected $4.2 billion hole, representing a $2 billion operational loss, and bank penalties, apparently from conti-nuous hefty overdrafts, incurred by the SCJ's four factories during the 2008/2009 season, Agriculture Minister Christopher Tufton has disclosed.

"The facilities, the structure have become almost disposable items where every single year the Government has to advance resources to retool. It is as if you are building a new factory every year." Tufton echoes the frustration which has set in within the government over the continued hemorrhaging at the island's largest sugar producer.

$21-billion debt

With an already sizeable $21-billion debt and losses totalling more than $14 billion since 2005, the enterprise has registered losses over a number of years, resulting in a decision by the previous People's National Party-led government to make another attempt to place the business in private hands, hoping to stem the financial bleeding and transform the industry.

The Government is anxious to ditch the economic albatross the loss-making SCJ has become, and is preparing to enter talks with a wider field of interested purchasers. While the door has not been shut on IBE, which has blamed the global economic recession for its failure to attract equity partners to the Jamaican sugar investment, the Government has extended an invitation for new bids. "If an investor comes on board and is willing to invest, we are prepared to put on the table what was negotiated with the Infinity group," Tufton told Wednesday Business.

Alternatives

In its eagerness to offload the sugar enterprise, the state is also not averse to breaking up the SCJ and selling it in pieces. Tufton said if there was no suitable buyer for all the factories and lands, "we will look at the alternatives involving a piece of the package, which is piece of estate or a combination of estates."

Chairman of the sugar cane industry enterprise team, which is leading the sugar sale talks, Aubyn Hill, refuses to divulge the identity of other interests keen to take the SCJ off the Government's hands.

However, already the Peter McConnell-led Worthy Park Estate and the Jamaica Sugar Cane Grower's Association, the umbrella group for small cane farmers, have indicated that they are waiting to be called back to the table to discuss their proposals to acquire all or part of the Government's loss-making sugar operations.

A decision is yet to be made by the Lascelles deMercado group on whether to make another try through subsidiary J. Wray and Nephew Limited at the SCJ assets or sugar lands. Group General Manager William 'Billy' McConnell said yesterday a decision would likely be made after the board meets in 10 days, or possibly even after the company holds its annual general meeting.

Hill is reiterating the Government's position in the aftermath of the failed divestment to IBE.

"Anybody who has a well thought out plan can present a proposal. It will then be accepted on its merit and it will be presented to cabinet with a recommendation."

At the same time, if it can find a taker for the SCJ, the Jamaican Government is believed to be open to the possibility of taking a stake in a modern refinery with efficient management to meet the demand for refined sugar locally and in the Caribbean Community market.

In March last year, the Bruce Golding-led administration began negotiations with IBE. Under the deal contemplated, the Government would hand over the 40-million gallon Petrojam Ethanol plant to Newco Ltd, the new IBE Jamaican subsidiary, upfront US$25 million, absorb an estimated J$18 billion of SCJ debt and bankroll the redundancy payments of J$2.7 billion for some 13,000 sugar workers to be sent home.

As part of the arrangement with the Brazilians, the Government would apparently have received no cash, but was instead earmarked get a 25 per cent stake in the new company valued at US$25 million (J$1.8 billion).

Infinity failed to meet deadlines of September 30 and December 3, 2008, as well as an extension to January 31, 2009, forcing the Government announce last weekend that it was taking the deal off the table.

mark.titus@gleanerjm.com