The Fiji Sugar Corporation has identified weak cash flows and severely limited borrowing capacity as major obstacles to its future development. The corporation reported that this ongoing financial pressure has resulted in reliance on high-interest borrowing to cover regular operational costs, which has led to an annual average interest expense of nearly $18 million over recent years.
FSC chairman Nitya Reddy expressed particular concern regarding the alarming growth in the corporation’s debt over the past two decades, climbing from $7 million in 2006 to $443 million by the end of the financial year on May 31, 2024. Of this total, $156 million is due within the next 12 months.
Reddy stated that this level of debt not only indicates that the FSC is technically insolvent but has also necessitated ongoing government financial guarantees. He noted a troubling lack of evidence showing that these funds have been used judiciously for long-term productive investments.
In the FSC 2024 annual report, Reddy emphasized the need for the corporation to pursue transformation and growth vigorously. He highlighted that the improvements in financial performance, operational efficiency, and strategic planning provide a solid foundation for moving forward.
The FSC is focused on enhancing the entire value chain from the fields to the factories to boost productivity and decrease costs. This strategy includes investing in research and development to foster innovation in sugarcane agriculture and milling processes.
Reddy pointed out that the FSC cannot rely solely on its current crop yield, which is below 15 million tonnes, and asserted that stakeholders must actively participate in its recovery efforts.