The GNPA Limited, formerly Ghana National Procurement Authority, has entered into a strategic alliance with an indigenous company to import 12,500 tonnes of sugar every month to help tame prices of the commodity in the local market.
A tonne of the commodity is estimated at US$450, bringing to US$67 million the annual value of the agreement between the supplier and the GNPA.
The imports are to be done under the free zone initiative, the Managing Director of GNPA, Mr Douglas Y. Kumasi, told the Daily Graphic.
Although a bulk of the sugar would be consumed in the country, Mr Kumasi said part of it was to be retailed in neighbouring countries, including Nigeria, Mali and Burkina Faso.
“We expect it to help drive down prices of sugar or at least stabilise the prices. We also expect the small foreign exchange we will generate from the sale in neighbouring countries to help our finances and the country in general,” he said in an interview.
The MD declined to disclose the name of the private company involved, citing contractual clauses, but said the sugar would be sourced from Brazil.
“It should have even started in January but the company had some issues with the supplier. They are sorting them out and we understand it will be finalised soon for the first consignment to come before March ending,” he added.
Global price of sugar, which is a household and commercial commodity in the country, fell by 10 per cent in 2015 but is now estimated to rise by some 15 per cent this year as a result of a supply deficit.
The deficit is estimated at 1.4 million tonnes and has been blamed on expected poor harvests of sugar cane, the raw material, in major producing countries, including Brazil and India.
An increase in sugar prices in the country could impact negatively on most consumables, resulting in an uptick in inflation.
Thinking outside the box
The alliance between the GNPA and the private importer is one of the initiatives to help revive the company, which was established in 1976 as a strategic importer of essential commodities to help stabilise prices of those consumables in the local market.
After becoming a household name in the commodity import and retail business in the country in the 1990s, the GNPA’s fortunes nosedived, following a restructuring that cut off its source of funding in the early part of 2000.
The result was the accumulation of debt, which took a toll on the company’s finances and operations.
Although it has successfully cleared those debts, years of underfunding from the state has weakened its balance sheet, forcing GNPA to downsize and lay off some staff in the recent past.
To be able to remain relevant, the MD said the company had to do things differently.
“We are now trying to think outside the box because if you do not have a strong balance sheet, what do you do?” he asked.
“That is why we came out with this idea of strategic alliance, whereby private companies can bring their finances and we also come on board with our marketing expertise and credibility to still stay in business,” he said.
The imported sugar is expected to augment produce from the Komenda Sugar Factory, which is expected to produce 125 tonnes of the product when it starts production.
Sugar imports currently cost the country over US$300 million annually, an amount that could be saved if sugar cane production was encouraged to help feed local processors.
Source: Daily Graphic