The Fiji Sugar Corporation (FSC) has come under scrutiny following the release of a board paper from October 2018 that highlights significant financial difficulties stemming from the Sugar Technology Mission (STM) mill upgrade conducted by the Indian Government. The document, prepared by former CEO Graham Clarke and CFO Manoj Kumar, reveals that the STM project failed to meet its objectives and has had a lasting negative impact on FSC’s operations.
Initially, FSC proposed a $220 million upgrade plan for their four mills—Lautoka, Rarawal, Labasa, and Penang—in 2003. However, they ultimately opted for a $115 million proposal from STM, which only covered three of the mills. The board paper cites that the equipment and materials provided during the upgrade were often of inferior quality, and the execution of the project faced poor management and oversight.
The financial repercussions were severe. By May 31, 2010, the total cost of the STM project reached $118.7 million, with additional costs of nearly F$118.9 million incurred over five years due to the poor implementation of the upgrade. This mismanagement caused the operating cost per tonne of sugar to increase significantly and resulted in an estimated loss of around $108.2 million in potential revenue for FSC.
Concerns raised in the board paper included inadequate project supervision, high expenses from hiring Indian expatriates to operate the undersupervised mills, and the absence of a training program for local staff. The document critiques the lack of effective project management and transparency, suggesting that the individual in charge had excessive control without proper checks in place.
Looking to the future, there is hope amid the turmoil. FSC is committed to improving its operations and has indicated that lessons learned from the STM experience will inform their approach to future projects. It stresses the importance of engineering and quality standards over mere cost considerations in project work. Furthermore, FSC’s ongoing financial rebound, highlighted by recent increases in revenue and profitability, signals potential for recovery. With a focus on sound management practices, accountability, and strategic investments, the corporation aims to navigate the ongoing challenges and bolster Fiji’s vital sugar industry.
The board’s emphasis on accountability and improved governance is critical, as stakeholders look toward the establishment of a more sustainable and resilient sugar industry in Fiji.
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