By Vernon Daley, Staff Reporter 
Davies
THE PROBLEM-PLAGUED Sugar Company of Jamaica (SCJ) has been given seven years to pay off a $4.17 billion loan from the Bank of Nova Scotia, which it is drawing down to clear existing debts.
However, if the company is unable to make the payments, the Government will have to step in to bail it out.
Parliament on Tuesday gave its approval for the loan guarantee after a brief debate.
"The Government guarantee will put the SCJ in a position to preserve the livelihood of ordinary Jamaicans who depend on the operations of the estates at Frome in Westmoreland, Monymusk in Clarendon and Bernard Lodge in St. Catherine," Minister of Finance and Planning Dr. Omar Davies told the House.
He pointed out that the funds will be used to refinance some loans on the books of the SCJ, liquidate certain other loans and liabilities to other financial institutions and provide working capital.
There will be a 12-month moratorium on the principal amount which is $3.5 billion. However, the agreement makes provision for interest payments, up to a maximum of $675 million for the first 12 months of the life of the loan. An interest rate of 18 per cent per annum will be charged until September 2002 after which it will be reviewed.
Opposition Spokesman on Finance Audley Shaw said the Government had to focus on a strategic plan for the sugar industry drawing on the experiences of successful, privately-owned estates such as Appleton in St. Elizabeth and Worthy Park in St. Catherine.
"The Government has put the cart before the horse. The people of Jamaica deserve to know what the plan is to rescue the sugar industry and ensure that their taxpayer funds are not simply going down a sinking hole," he said.
Agriculture Minister Roger Clarke defended Government's support for the sugar industry during his contribution to the debate. He said critics who argue that the country should get out of sugar needed to say what should replace it.
"If we solve the problems of the SCJ, then we would solve the problems of the sugar industry," the Minister said.
In 1993 a consortium made up of J. Wray & Nephew Ltd., Manufacturers Investments Ltd. and Booker Tate Ltd. formed the SCJ. The company purchased assets of Frome, Monymusk and Bernard Lodge sugar estates which together represent some 65 per cent of the capacity of the sugar industry.
However, in 1998 Government purchased the company, and set out a three-year plan to turn around its finances. Despite this, the company continued to run up huge debts.
A recently released study on the sugar industry has recommended that the Government shut down the Bernard Lodge sugar factory in St. Catherine and concentrate on upgrading the Frome Estate in Westmoreland as part of a recovery plan for the island's struggling sugar industry.
If the recommendation were to be implemented, it would result in 492 workers losing their jobs and Government having to shell out $2.3 billion in capital investment and redundancy payments over a five-year period. The proposals are now being studied by a committee headed by Minister Clarke and include respresentatives of the sugar industry.
