The Fiji Sugar Corporation Limited continues to rely heavily on the government which is one of the major shareholders of FSC.

This is evident yet again in FSC’s Annual Report released for the year ended 31st May 2010 where the government has continued to give guarantees to the country’s sugar producing company to ensure that it secures loans to keep it afloat.

The government has already made the commitment that it will continue to assist the FSC and the industry as a whole to ensure that proper restructure programs are carried out because many people rely on the sugar industry.

It is clear that more needs to be done to ensure that FSC becomes profitable.

FSC has incurred significant losses during recent years.

During the year ended 31st May 2010, the Corporation incurred a loss of $175.1 million compared to the $36.8 million loss in 2009.

In 2010 the total loss includes the impairment loss on property, plant and equipment of $173.4 million.

The Corporation is now being assisted through loans and a number of government guarantees.

It has a borrowing contract with the EXIM Bank of India which was signed in 2005 and amounts to $US50.4 million for the upgrade of the sugar mills.

The loan is guaranteed by the government.

The outstanding balance is $US41 million under this guarantee.

It has also been confirmed that the Corporation paid $8.4 million as a supplementary cane payment during the year ended 31st May 2010, and the entire payment was funded by way of a term finance from the Sugar Cane Grower’s Fund.

The interest cost in respect to the short term finance will be met by the government.

The government has also approved a guarantee limited to $120 million, valid until 31st May 2012, to enable the Corporation to raise short term loan finance to meet its working capital requirements.

Apart from this, FSC has borrowed $22.5 million from the Reserve Bank of Fiji, $44 million from FNPF, $19.1 million from Bank of Baroda, $1.4 million from Bank of South Pacific and $1.4 million bank overdraft from Westpac.

All these borrowings are also secured by the guarantee from the government of Fiji.

The next 12 months will also be challenging for the FSC as it has significant debt repayment commitments amounting to over $60 million.

The Corporation will require significant funding to meet its working capital requirements, capital expenditure and fund the operating losses.

The total funding requirements for the current financial year ending 2011 and 2012 is projected to be around $170 million.

Cabinet has already discussed a detailed report prepared by Deloitte on the FSC and its operations however it has not been made public as yet.

As reforms and plans for restructure in the industry continues, the reality also remains that sugar production continues to decline with 167,611 tonnes of sugar produced last year compared to 207,911 tonnes produced in the previous season.

Plans are now in place to reduce costs and have improvements in mill performance and cane production to ensure that the industry, the people involved and the country as a whole sees brighter days ahead.


Story by: Vijay Narayan