PM QARASE ANNOUNCES RESTRUCTURE OF TROUBLED FIJI SUGAR INDUSTRY

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SUVA, Fiji Islands (September 27, 2002 - PINA Nius Online)---Fiji's ailing sugar industry is to be revamped into a profitable world-class commercial enterprise, Prime Minister Laisenia Qarase told Parliament yesterday.

Sugar -- one of the key sectors of the Fiji economy -- must be able to survive in the international market without relying on the current subsidies from the Europe Union (EU), Mr. Qarase told Parliament.

Announcing a five-year restructure plan, Mr. Qarase said the EU subsidies through preferential agreements are likely to end in 2007.

"We must become more efficient and productive in all aspects of growing, transport and milling," he said.

Mr. Qarase said the reorganization envisages mill employees, farmers and landowners uniting as shareholders in four new companies based on the present mills.

He said: "The companies would become subsidiaries of a parent holding company to replace the Fiji Sugar Corporation (FSC) but they would manage their own affairs.

"Shareholders serving as directors are to include landowners, growers and employees."

Mr. Qarase said the main function of the companies will be to make high quality sugar at the lowest cost and produce a reasonable return on investment.

"They will also transport contracted cane from the farms to the mills for crushing.

"Old and inefficient rail transport will be partially phased-out to be eventually replaced by a modern fleet of lorries provided by private transport contractors.

"In the new business structure, there would be no further role for the Sugar Industry Act and the Fiji Sugar Corporation Act. Similarly, the Sugar Commission of Fiji, and the Sugar Industry Tribunal would no longer be necessary."

He said they have served the industry well previously, but would not fit into the commercial environment the industry must have if it is to survive.

"Government would continue for the time being as a guarantor, but with the guarantee linked to reform for commercial viability," Mr. Qarase said.

"At this stage, its guarantee would be for loans of varying amounts over 10 years. This would peak at F$ 125 million (US$ 57,487,500) in 2005 for borrowing incurred over the five years from 2003 to 2008.

"This Government support would make it possible for the industry to raise finance needed for upgrading machinery, equipment and infrastructure.

"Additionally, Government would be required to supply a once-off cash injection of F$ 24 million (US$ 11,037,600) to restructure the FSC balance sheet."

Mr. Qarase said decisions also have to be made on whether to convert an existing Government loan of F$ 34 million (US$ 15,636,600) into share capital or to write it off.

He said the Asian Development Bank is providing technical assistance for the early stages of the restructure, and financial assistance for the social impact.

He added that the European Investment Bank is also interested in loaning up to F$ 60 million (US$ 27,594,000), provided the restructure is implemented.

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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