January 21, 2022
The reality of the matter is that the Fiji Sugar Corporation is technically insolvent and bankrupt without the support of taxpayers through Government because of the Corporation’s inability to pay its massive debts, said National Federation Party Leader Professor Biman Prasad.
Responding to FSC Chief Executive Officer Bhan Pratap Singh who said in a statement that FSC is financially sound, Professor Prasad said no amount of sugar-coating can hide this painful and bitter truth of a Corporation that has been left in a dilapidated state like its milling equipment under the leadership for the last 15 years.
“Mr Singh should know that late last year Government through the Ministry of Economy was forcibly acquiring about 6 percent shares held by individuals and organisations at $0.005 or half a cent per share”.
“If this is not bankruptcy, what is?”
“Sugar-coating the fundamental ills under the now broken and scratchy record of the leadership and governance of the last 15 years, is clearly aimed at ridiculing the Opposition and hiding the fundamental fact of this government’s colossal failure to revive the industry and save FSC from drowning”.
“All this government, which has total and absolute control of the industry, is doing is pumping in millions of taxpayers’ dollars into the Corporation. The FSC CEO, despite being in the job for less than a year, must surely know that this type of bailout by government is written in indelible ink”.
“The massive failure by government to resuscitate the industry by increasing sugarcane and sugar production has contributed in a large measure to FSC now becoming technically insolvent. And this means bankruptcy without taxpayers’ funds”.
“Any business has a core objective. FSC’s core business is to crush enough cane and produce sufficient sugar to make profit from the share of proceeds it receives under the Master Award. But this isn’t happening”.
The Auditors clearly pointed out in FSC’s 2020 Annual Report that the Corporation is unable to operate as a viable entity without government support”.
“The Auditors further noted that the extent to which the existing Government guarantees, and potential further support, are required is dependent on, among other things, the future sugar price, the quantity and quality of cane supply, the success of intended improvements in mill performance and the timely and effective implementation of management's plans and initiatives”.
“In the financial year ending 31st May 2020, the taxpayers of Fiji, directly and indirectly, contributed $248.8 million. This was in the form of”: -
· Conversion to equity of a government loan of $173.8 million
· $50 million grant
· $25 million paid by government to Fiji National Provident Fund as guarantor of two loans of $15 million and $10 million because FSC defaulted on the loans
“There are other serious concerns pointed out by the Auditors despite the conversion of $173.8 million of loan into equity”.
“The 2020 Report showed FSC’s current liabilities exceed its current assets by $144.4 million. This means that even if all of FSC’s assets including its mills are sold, the Corporation would still fall significantly short of clearing all its liabilities”.
“Government’s inability to turn around FSC and increase sugarcane crop yield despite pumping in millions of dollars, is a painful example of a leadership that manufactures and churns out useless rhetoric in an attempt to camouflage its inherent weaknesses”.
“Mr Singh should stick to his job of ensuring FSC’s core business objective of crushing cane and manufacturing sugar is met instead of being used as a puppet of this government”.
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