Sugar block

US-based financing company gives Govt 14 days to save sugar restructuring plan

Government’s proposed US$250 million Cane Industry Restructuring Project (CIRP) has effectively been ground to a halt, following the pull out of all the major backers.

Barbados TODAY investigations have revealed the financiers, namely the World Bank, the Inter American Development Bank and the Japanese, have all backed out of the much-touted sugar revitalisation programme on the heels of Barbados’ triple notch downgrade by Moody’s back in June.

When contacted, Minister of Agriculture Dr David Estwick confirmed that Government had been forced to seek a new source of financing in New York.

However, though adamant that sugar will not be allowed to die under his watch, Dr Estwick complained that Government was dragging its feet on the alternative private-public partnership (PPP) deal, which could get the project back on track and effectively safeguard the future of more than 4,500 workers and farmers who depend on the industry for their daily bread.

A frustrated Dr Estwick explained to Barbados TODAY that as a result of the recent pull out by investors, “we [agriculture officials] decided that it was best to move the project from a Government-led project, because Government’s risk profile is the factor that seems to be affecting the various Government projects”.

The Agriculture Ministry had further agreed to shift the venture from a mere public venture, to a public-private partnership, with financing from the United States-based National Standard Finance (NSF).

Under the new proposal, which was put before Cabinet in September, the St Lucia-based Inter-Sugar Partnership Ltd (ISPL) was also identified as the private entity which would manage the project for a period of time and then lease it back to the Government.

Dr David Estwick
Dr David Estwick

“I am hoping the Government would move with great speed to have the offer from NSF reviewed and we can get on with the business of transforming the sugar industry to a sugar cane industry,” he said.

The Minister of Agriculture further disclosed that while the alternative funding agency was willing to provide loan financing for the sugar restructuring, it was only prepared to deal with a private entity and not the Government because of the high risk involved.

However, based on correspondence exchanged between the Ministry of Agriculture and ISPL, top brass of the financing company are very concerned about an apparent lack of urgency on the part of Cabinet in having the recommended deal finalised.

 In a letter dated October 30, 2014 and addressed to Dr Estwick, ISPL director Edward Marston noted that a letter of intent issued on September 17 had expired without any effective progress being made.

“I have reiterated that we are unable to move forward without Cabinet authorisation,” the letter said.

In view of the company’s recent past experience in Barbados, Marston also stated that “NSF are inclined to be nervous about committing time and resources to a project which did not have all necessary approvals”.

He also said “doubts have been voiced by NSF principals about the merits of supporting Barbadian projects”.

The letter also included a 14-day deadline, which is due to expire by November 13, for Cabinet to resolve the matter, warning that “if we are unable to achieve a formal engagement within the prescribed time, which I understand will be limited to four weeks, NSF will be reluctant to proceed any further”.

In view of this letter, Dr Estwick is worried that Government is “really cutting it close and running the risk of losing the opportunity for funding”.

“When you have the World Bank indicating that they are not taking any further risks for Barbados and then the insurance arm pulling out and also the IDB; the Japanese decided they were going to cut their losses and gradually started to pull out of this operation, it then forced us to have to look for alternative funding, but at a very good rate.”

Saying he has done all that he could to save the sugar industry, he noted that the Multilateral Investment Guarantee Agency (MIGA), the insurance arm of the World Bank, was willing to return and underwrite the venture, but only after Cabinet gave the go ahead for the PPP.

“In other words, what the World Bank and those fellows are saying, is that the risk to projects done by Government is too high. If the project is done by the private sector, then they would get involved . . . It is now a PPP. So the insurance companies of the World Bank have now stepped back. So what that is telling you, is that Government is the problem,” the Minister of Agriculture said.

Dr Estwick said that while the matter was not discussed at Cabinet yesterday, he spoke with Minister of Finance Chris Sinckler about speeding up the process and he was now hoping for a resolution.

The Minister of Agriculture noted that the development comes at a time when the Barbados Agricultural Management Company (BAMC) was under stress and “going week to week”.

“[So] you don’t know whether the BAMC got money, and the Ministry of Finance doesn’t have money to support anybody. So this is a serious matter,” he said.

Well-placed sources also told Barbados TODAY that the $60 million, which was being provided by Ansa Merchant Bank of Trinidad and Tobago for disbursement to the farmers to increase cane production and to satisfy the start-up operations of the proposed multi-purpose factory at Andrews, in time for the 2017 crop season, was also tied to Cabinet’s approval of the restructuring project.

No work has been done on the proposed site for the multi-purpose sugar factory here at  Andrews in St Joseph.
No work has been done on the proposed site for the multi-purpose sugar factory here at Andrews in St Joseph.

So far, Sinckler has said that $30 million of that would be immediately released. However, sources have warned that the remainder would not be disbursed until Cabinet gave the “greenlight” to pave the way for raising the money for a PPP undertaking.

11 Responses to Sugar block

  1. Arther Lashley November 8, 2014 at 6:16 am

    “OH! What a tangled web we weave ,
    when first we practise to deceive”

  2. Alex Alleyne November 8, 2014 at 8:41 am

    First of all , Barbados do not have the “available land” to plant and grow Sugar Cane on such a big scale .

  3. Benjamin sealy November 8, 2014 at 8:57 am

    In regards to this arcticle I wonder if the Barbados government is in a state of oblivion n denial to realize they are the reason why the country is in this state financially and economically

  4. dwayne jordan November 8, 2014 at 9:17 am

    Sinckler…..its comes with ulterior motives!!! Mark my words…

  5. Dawn Rollins November 8, 2014 at 9:50 am

    This is nothing new, the only difference is this one was brought to light. Several projects fell on their faces because of lack of interest & urgency by this government.
    Just last week I was speaking to friends regarding the economy & the performance of the government up to date. I am wondering why the Prime Minister is not reshuffling his cabinet. He needs to give Dr Estwick a crack at the Ministry of finance. Replace him with Mr Brathwaite. Give Mr Lashley the AG post. The current Minister of Finance should be assigned to Transport & Kellman should be removed as Minister of Housing & lands & give this to one of the girls.
    DO SOME THING!!!!!!!!

  6. Patrick Blackman November 8, 2014 at 10:48 am

    Very good news indeed, its time the people of B’dos realize that sugar is dead. Why put 250M into a dead industry. Produce sugar for local consumption and rum manufacturing only. That 250M could go directly into revitalizing all those idle plantations and boost local agriculture.

  7. Morris Redman November 8, 2014 at 11:52 am

    Forget sugar which like most sweeteners will become just like tobacco, governments will be paying money to get people to stop using them because of the medical repercussions. Invest in growing more vegetables to reduce the import bill while providing healthier choices for the people of Barbados.

  8. Samuel Dac Boyce November 8, 2014 at 1:12 pm

    Government needs to make a decision quickly because the initiative reference the public-private partnership appears to be a very idea in order to boost the sugar industry in Barbados. Though tourism is the main foreign exchange earner, sugar from export component can also assist in off-setting dependency and imports though there is not much choice.
    From the days of the early Plantation Economy, Barbados has developed by this venture of the sugar industry, there is a need to allow this initiative to bolster, so that Barbadians can benefit both from having a paying job and total satisfaction of being able to put food on their tables. I am in total agreement with Dr. David Estwick.

  9. Anthony Hinds November 9, 2014 at 12:11 pm

    And when you kill sugar what will you get foreign exchange with,,,surely not the dead tourism industry.even if you grow enough vegetables for local consumption how are you going to import anything without that foreign exchange,

  10. Rickie Nurse November 10, 2014 at 12:20 pm

    Only two weeks ago a similar topic relative to this was up for comment and discussion, I made my views clear then, so I’ll tyr not to be repetitive.

    What I would focus more broad base on is the fact that a sitting Minister, one with the overseeing authority for the Agricultural Industry, can openly state that government is dragging it,s feet on a project that THEY proposed and initiated , which came about as a result of Investors backing out from financing the project, because of the triple digit downgrading by MOODY’S and the high risk, or should I say the EXTREME RISK they would be undertaking.

    Does that not spell LACK OF INVESTORS CONFIDENCE in this administration?

    Are we still going to allow this government to hoodwinked us into believing that they are competent ?

    Will you continue to believe Freundel, Chris Sinckler and Delisle Worrell, when they said and will probably say again that, international credit ratings is not anything to worry about, it’s just a guideline ?

    Isn’t the proof in the pudding not now enough for you all to rethink your previous mindsets, thinkings, confidence and blind loyalty to this FAILED government ?
    It has come straight from one of the horses mouth in that stable.

    The Sugar Industry is just a precursor of things to come. Patrick Blackman made excellent suggestions in his comment that SHOULD BE HEEDED, then again myopia runs deep within this government, so he will just be another small fish of igsignificance to be ignored.

    The writing is there on the wall for everyone to see, except for those who will not see.

  11. Patrick Blackman November 10, 2014 at 4:14 pm

    The next move after putting the money back into sustainable agriculture, make it mandatory for every hotel on the island to use 90% local content in every aspect of their operation. All menus in dining establishments should have this content (90%) this would significantly reduce our import bill and create jobs.

    Secondly, stop building more hotels we don’t need them, if any investor wasn’t to setup here he/she could acquire an existing property or renovate the same but no more new hotels, the place is like a concrete jungle.

    Thirdly, we must get rid of this notion of “house spot” multi level (apartment living) is required now. Gone are those days, people need affordable housing as land prices are just plain inflated to say the least. Stop all non-resident (Bajans) from buy land.


Leave a Reply

Your email address will not be published. Required fields are marked *