The Fiji Sugar Corporation has identified weak cash flows and significantly limited borrowing capacity as major obstacles to its future development. The corporation revealed that this “deep stress” has necessitated frequent borrowing at high interest rates, primarily to support its routine operations. This has resulted in average annual interest expenses nearing $18 million in recent years.
FSC chairman Nitya Reddy expressed concern over the steep rise in debt levels over the past two decades, escalating from $7 million in 2006 to $443 million by the end of the financial year on May 31, 2024, with $156 million due within the next year. He indicated that such extreme debt exposure places the FSC in a position of insolvency, relying heavily on government guarantees for survival. Moreover, he pointed out the minimal evidence of effective utilization of these funds for any long-term productive investments.
Looking to the future, Mr. Reddy emphasized the need for the FSC to embark on a transformational journey with renewed focus and commitment. According to the FSC 2024 annual report, the corporation has made significant progress in financial performance, operational efficiency, and strategic planning, setting a solid groundwork for its objectives.
The FSC is dedicated to enhancing the value chain from agriculture to processing in order to boost productivity and lower costs. This includes a commitment to research and development aimed at fostering innovations in sugarcane cultivation and milling processes. Mr. Reddy highlighted that the FSC cannot survive on its current production levels, which are below 15 million tonnes, and underscored the necessity for stakeholders to actively engage in its recovery efforts.