The agriculture minister, Dr Christopher Tufton, and the administration generally, would appreciate why we are not sanguine about the planned divestment of the state-owned sugar company to the Brazilian-based firm, Infinity Bio-Energy.

Indeed, Dr Tufton's December 23 press conference, which he apparently hoped would inspire confidence in the deal, as the minister would probably concede, failed to achieve his objective, if not having an entirely contrary effect. Dr Tufton left his audience with too much uncertainty about Infinity's capacity to finance the business properly even if it muddles through to a formal acquisition by the month-end deadline.

The context of this divestment has to be borne in mind for a fuller grasp of our concern and the deep worry of many of the stakeholders in the sugar industry. Simply put, the Government, with the huge national debt and big public sector deficit, just cannot afford to carry the sugar industry any longer.

Despite past direct embrace and write-off of losses by the Government, the Sugar Company of Jamaica (SCJ) is more than half billion in debt. It cannot afford properly to refurbish and modernise its factories or upgrade fields. The industry's problems are exacerbated by the erosion of its preferential market in the European Union (EU), which is lowering guaranteed prices to EU and African, Caribbean and Pacific sugar manufacturers as a concession in global trade negotiations.

Sugar, ethanol combination

With more than 40,000 people directly and indirectly employed in sugar production, mostly in rural communities, Jamaica believes it has no option but to keep the industry going. Its strategy is to combine sugar manufacturing with ethanol production, the latter of which is the forte of Infinity Bio-Energy, a relatively new company among whose principals is a private equity fund.

Infinity's profitability has not been great and its share price, even earlier in the year when it began serious negotiations with the Government to acquire SCJ, was far from robust. There was concern at the time even if it could raise the capital - US$125 million it turned out - to fund the acquisition, which includes a government-owned ethanol plant.

The administration has not laid bare the facts, but apparently, the issue of financing was a major part of the problem for Infinity's failure to close the deal and take control of SCJ on the previous deadline of September 30.

With only a week to go for the new takeover deadline, Dr Tufton at his press conference, waffled between confidence and uncertainty that it would happen - which hardly inspires confidence. Indeed, the minister acknowledged the likely confusion among industry stakeholders of the Government making workers redundant and "us not having an agreement". Either party can walk away from the negotiations up to December 31 without consequences.

It is clear that there are many bumps and troughs in these negotiations, not least of which, we suspect, have to do with the state of Infinity's balance sheet. A dozen years ago, the then Government divested the sugar industry and soon reacquired it. It is important that the industry be divested, but this time it should be done right, not, as it appears likely, of history repeating itself.

Hopefully, proper, even if belated, due diligence has now been done, or that the Government has alternative suitors waiting in the wings should this sugar deal go sour. If not, they should.

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