Government has agreed to waive the sugar levy for 2002 to assist with the financing of the new factory at Skeldon but has made no public pronouncements on whether it is just a one-off event or abolition.

Since the state levy on sugar revenues was implemented in 1974 it has been catered for in the annual budget. In the 2001 budget, provision was made for the levy but no funds were actually taken. This year's budget makes no provision for the levy for the first time in 27 years.

There have been calls by the PNC/R and ROAR parliamentary representatives for a clear statement from the government on this issue.

In a memorandum with the World Bank last year, the government committed itself to shift from a sugar levy to a dividend payment scheme and although $1.2 billion was budgeted to come from the levy, none was collected in 2001. This year, the budget made no provision for a sugar levy but there has also been no clear-cut policy statement on the issue and repeated efforts to contact Minister of Agriculture, Navin Chanderpal, have been futile.

However, when asked about the status of the levy, Chief Executive of the Guyana Sugar Corporation (Guysuco), Brian Webb, said that some time ago, the government agreed to waive the levy to assist with the financing of the new factory at Skeldon.

"In 2001 the GOG agreed in principle to move to a dividend payment scheme, the mechanics of which have not been worked out as yet. So it is premature to make any comments [on the issue]," Webb told Stabroek News on Friday.

PPP/Civic General Secretary, Donald Ramotar's view was that the levy had now been permanently abolished. He said his party had given a commitment to do away with the levy when it was in opposition and whilst it could not have been done so immediately on assuming office, it had now done so. Ramotar, who sits on Guysuco's board as a director, said the PPP/C worked assiduously to implement its entire manifesto and campaign promises and continued to do so.

But PNC/R executive, Winston Murray, said his party had no problem with the principle of switching from the sugar levy to a dividend payment scheme, but worried about the timing of the move and whether it was not in effect a bail-out of the sugar industry - the country's main foreign exchange earner - from its financial difficulties.

Webb confirmed that 2001 was not a "good year financially" for Guysuco, primarily due to the very low exchange rate of the Euro to the US dollar and the Guyana dollar.

"The corporation anticipates suffering a loss for the year 2001, the first in ten years. The final details of this will be available once the year end audit is complete," Webb told Stabroek News. He saw the year ahead as being equally difficult, although the larger crop now estimated at 324,000 metric tonnes of sugar would result in an improved financial situation. He said this would probably not be sufficient to prevent a loss for a second year as the Euro was not showing signs of recovery. The Euro was trading against the US dollar on Friday at 88 cents, a slight improvement over previous months.

Webb said that Guysuco had taken investment decisions to improve agriculture performance by increasing its agricultural fleet size and purchasing modern land preparation machinery. He said large investments have also been made in upgrading drainage capacity and a number of additional pumps would come on stream this year to the benefit of the corporation and the wider communities.

"We are interested as a party, which has the national interest at heart, to see the viability of the sugar industry. But the question is not the principle of switching from the sugar levy to a dividend payment scheme which ordinarily would be quite appropriate but whether the timing of the removal is not linked to the state of the industry which is not profitable," Murray said on Thursday.

He said if the government was in effect subsidising the industry by removing the levy then sugar would not be making a positive contribution to revenue and that was his concern.

Murray wants the government to make a clear announcement of what its intentions really are as the public was faced with two isolated cases of the levy not being collected.

He noted that the sugar industry was seen as a strong political ally of the PPP/C and the issue at hand really had to be the profitability of Guysuco, to ensure it made a fair contribution to the government's coffers.

The former trade minister noted that the levy was instituted in 1974 when Guysuco was in private hands, to prevent all the profits from being repatriated overseas. This was at a time when the industry was making huge profits because of the heavy demand and high price for sugar. He noted that a formula allowed for the levy, which would increase if the prices went beyond certain levels.

He said now the government would not object to large profits by the corporation since it was wholly state-owned, but questioned what was being done to ensure the profitability of the industry which faces the removal of preferential prices in a few years.

Ravi Dev, ROAR's leader and MP held a similar view. He said that his party's position has always been that as a matter of principle, the sugar levy ought to be abolished, but not as an ad hoc measure simply to facilitate the modernisation of the Skeldon estate.

He said if the levy was removed permanently, then it would allow Guysuco to be treated as a real corporation and the profit-sharing formula on its books would be meaningful. However, he was cynical about the government's approach to the matter, which he saw as a bail-out of the industry and asked whether the decision made good business sense.

He added that he had raised the issue in parliament, but received no response and called on the government to make an unequivocal statement on whether the levy had been abolished or whether it was a temporary measure to aid the modernisation project.

The two sugar unions expressed hope that the decision was a permanent one by the government and welcomed such a move.

"We welcome the decision not to have any money extracted from the industry in the form of a sugar levy which we opposed since it came into force in 1974. We are pleased [that there has been no levy in 2001 and will be none this year] and hope it will be a permanent decision," Komal Chand, general secretary of the Guyana Agricultural and General Workers Union said on Wednesday.

He opined that the industry was not in a position to pay a levy last year and if part of the revenue from the levy could go to workers this would be fair. He said even if the full amount went to aid the modernisation of the industry, it would become more viable and this would still redound to the benefit of sugar workers as it would afford them job security when preferential prices were discontinued in January 2006.

Kaisree Takechandra, general secretary of the National Association of Agricultural, Commercial and Industrial Employees said his union was also on record as calling for the levy to be removed and for the monies to be ploughed back into the industry. He noted that the government has been remitting a large portion of the levy in recent years to the industry and felt the measure was a move in the right direction.

It is not clear how much money has been creamed off from Guysuco since 1974 in the form of the sugar levy.