Parliament passes motion for Govt to guarantee FSC’s $20m loan

Parliament has unanimously passed a motion to increase the Government guarantee for the Fiji Sugar Corporation’s domestic borrowings of $75 million from 1st August, 2022 to 31st May 2028 by $20 million and that FSC be exempted from paying the guarantee fee.

While speaking on his motion, Deputy Prime Minister and Minister for Finance Professor Biman Prasad says for the 2024 financial year, FSC anticipates better results, with cane production of 1.56 million tonnes and making around 139,628 tonnes of sugar.

Professor Prasad says $240.3 million in total revenue is expected from sugar proceeds and molasses for the financial year and it is projected that Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the 2024 financial year will be a positive $22.2 million.

He says as at 30 April 2024, FSC’s outstanding borrowings guaranteed by Government stood at $276.2 million of which $200.2 million is covered by domestic Government guarantee and $76.0 million is covered by off-shore Government guarantee.

The Deputy Prime Minister says that as at 30th April, the total Government Guaranteed Debt stood at $1,030.8 million or 7.8 percent of the GDP and with FSC accessing an additional $20 million guaranteed borrowings, will increase the total Government Guarantee exposure to $1,050.8 million or 7.95 percent of GDP.

He says in the event of a default, the Government will be liable for the guaranteed borrowings of the FSC.

Professor Prasad says the Ministry of Finance will work with FSC to monitor the restructuring efforts of the Board and Management of FSC to ensure any fiscal risks are properly communicated and mitigated to the Government.

While speaking in support of the motion, Minister for Sugar Industry, Charan Jeath Singh says FSC will be paying $21.75 per tonne of cane on Tuesday as the fourth cane payment, bringing the total amount to $101.08 per tonne of cane for the 2023 cane payment which is higher than last year.

He says the last cane payment which is the wash up payment will be about $2 or $3 so they are looking at paying about $105 in the end.

Singh says in this current payment, they will be injecting $34.1 million into the economy and this significant payment reflects their commitment to ensuring fair compensation for our hardworking farmers and providing them with the financial stability.

Deputy Prime Minister and Minister for Aviation, Viliame Gavoka says we need to ensure that FSC continues to operate viably and produce ethanol which is a sustainable aviation fuel that will drive aviation in the future.

He says indications are that Fiji needs to produce about 3.5 million tonnes of cane to be able to produce ethanol at the required level for aviation.

The Deputy Prime Minister says our production is about 1.6 million tonnes of cane but the record we have is 4.2 million so it is possible to get 3.5 million tonnes to be able to produce ethanol.

FijiFirst MP Premila Kumar also supported the motion, however she says despite the assistance, the sugar sector is not performing to its optimum and the solution is to remove politics from the industry and build it purely based on a business model.

She says with Singh as a Minister who has been running his business, she is sure he will be able to bring that business sense in the operation of various institutions linked to the sugar sector.

Kumar adds she believes so many structures and institutions have been created but at end of the day the farmers are the losers and are depending on all these institutions to work in harmony and improve the revenue so they can gain from it but it looks like it is other way around.

She says they are trying to use the farmers’ money to keep these institutions going but they are not getting the level of return they deserve.

While supporting the motion, Leader of the Opposition, Inia Seruiratu says FSC is operating well below its capacity and the only way to improve it, apart from diversification is just to produce more in all the three mills so that it will help not only the financial position of FSC but come away from government guaranteed loans.

He says FSC field workers needs do more as he has observed that they seen to focus more on logistics rather than farm extension work which is needed to improve cane production and is expected of FSC field workers.

In his right of reply, Professor Prasad says when politics was in the sugar industry, sugar production was very high and there was a lot of knowledge sharing between growers councils and various institutions.

He says he agrees that all these institutions need to come together and hopes all stakeholders, particularly FSC looks at restructuring and the Finance and Sugar Ministries will make sure appropriate restructuring takes place and FSC manages its affairs in an efficient and effective manner.