Even though news have not been so good for the sugar industry for the past months, Mauritius doesn’t intend to throw in the towel. The authorities are taking the industry restructuring in hand with an ambitious plan to be presented to the European Commission before 29th April. The recent visit of a delegation of the ACP-EU joint assembly led by Welsh MP Glennys Kinnock may have helped the government to regain some strength as the Welsh MP showed much interest in the fate of Mauritius.

The multi-annual adaptation strategy 2006-2015 not only aims at giving a boost to the sugar industry but also helping all people involved in the sector. “The social aspect is really important. We do not want our society to be weakened,” declared the minister of Agro-industry, Arvin Boolell, during a meeting between all stakeholders to finalise the restructuring plan last Saturday.

The implementation of such a plan should cost Rs 24.5 billion to the country and the EU accompanying measures might not go beyond Rs 6 billion. With this in mind, the recent declarations by Glennys Kinnock that Mauritius should be allowed more money are reassuring. She even took the initiative to write a letter to the 25 EU Finance ministers to ask for a supplementary fund of 1.75 billion euros. However, the country should be aware that it can’t rely on hopes that the EU will make a move and should start looking for other financing methods.

To achieve successful restructuring, the industry will have to engage in a cut-cost strategy. The first step will be the closure of seven sugar factories to concentrate all activities on four factories - Savannah, Médine, Fuel and Belle-Vue. This will lead to early retirement for 1,200 factory workers and 6,000 agricultural workers; however, they could expect a better package than the previous Voluntary Retirement Scheme (VRS). A fall in overheads, staff reduction and use of seasonal workers are other initiatives that should lead to cost reduction.

The plan should also help the country face the rise in international oil prices. The production of electricity from “bagasse” will go from 300 to 600 GW/h. The production from bagasse and coal together will go from 750 to 1,700 GW/h. This should help the Central Electricity Board reduce its fuel imports.

Ethanol is a major aspect of the restructuring plan. With a production of 30 million litres that can be mixed to petrol - the country will save 10% on fuel imports. If the tests prove successful – Total and Alcodis will start the first ones next month – the law could be amended to produce ethanol not only from molasses but also from sugar cane juice (which is not the case at present).

Finally, the plan places high hopes on the production of “special sugars”. It could represent 50% of the global annual production to increase the industry’s revenue since they can be sold at higher prices than brown sugar.

The plan presented by Arvin Boolell looks promising… but the crux of it is proper financing.