FSC technically insolvent: Minister

[Posted 29 April 2003,1600]

Finance Minister Ratu Jone Kubuabola admitted FSC was technically insolvent as he sought approval from parliament to extend government guarantee for a $75 million bank loan for FSC.

The Fiji Sugar Corporation, until recently one of Fiji’s most lucrative State enterprises, registered a $20 million loss for the year ending March 2003…up a massive 35% on a $13.6 million loss announced for 2002. This brings accumulated losses over the past four years to $74 million.

The situation has steadily deteriorated since 1997 with 1999 the only year when FSC showed a profit, to the tune of $3 million.

The corporation has been kept afloat on government and bank loans to the point where it can only buy this season’s (2003) cane through government funding.

National Farmers Union general secretary Mahendra Chaudhry has blamed FSC’s financial disaster on poor management and incompetence.

“The Fiji Sugar Corporation which owns the four sugar mills is technically insolvent and still requires a substantial amount of funds for investment,” the Minister told parliament, pointing to the crisis in the sugar industry.

He admitted that the FSC’s financial position was so bad that no financial institution would consider giving it a loan without a government guarantee.

The corporation is hoping for a new lease of life from an industrial restructuring proposal that would enable it to receive technical assistance from the Asian Development Bank. However, the restructure, scheduled to have begun on April 1, has been put on hold due to opposition from farmers and mill workers.

Fiji cannot afford to allow the sugar industry to collapse: it remains the largest provider of net foreign exchange and accounts for 20% of Fiji’s total exports. It makes up 7% of the total GDP and 13% direct employment of the workforce.