‘Imports, SRA made future worse for RHI unit’

Sugar and ethanol producer Roxas Holdings Inc. (RHI) took a major hit as increased imports and an alleged instruction from the government to stop refining led to the closure of its wholly owned subsidiary.

The listed company on Friday explained the circumstances behind the permanent ceasing of the operations of Central Azucarera Don Pedro Inc. (CADPI) in Batangas.

RHI said the closure of CADPI and termination of all of its employees would “mitigate” the losses being incurred by the group, including manpower and other fixed costs.

RHI has incurred a net loss of P797 million and P938.9 million during the years ended Sept. 30, 2022 and 2021.

As of Sept. 30, 2022, the company said it has a deficit amounting to P3.92 billion.

Furthermore, RHI said “opportunities” to resume CADPI’s normal sugar refining operations have been “affected” and/or “limited” by the “increased” importation of refined sugar by the national government in recent years.

RHI also cited its discussions with the Sugar Regulatory Administration (SRA) as a factor in the permanent closure of CADPI.

According to RHI, it was informed by the SRA that CADPI could only resume offering refined sugar to the public once the country’s refined sugar stocks have been depleted.

This, RHI pointed out, would take around eight to 12 months, which would mean that CADPI’s sugar refinery would not be operating for that entire duration.

The company said eight to 12 months is “significantly” a long period of “nongeneration” income by CADPI.

“Thus, maintaining CADPI’s sugar refinery business proves to be extremely difficult and no longer viable,” RHI said in a disclosure to the Philippine Stock Exchange recently.

RHI said it is now coordinating the divestment of certain assets of CADPI, including idle assets, to pay its obligations.

RHI added that it has not made any definitive agreement yet with prospective buyers of the assets for sale.

SRA Administrator and CEO Pablo Luis Azcona belied RHI’s claims that there was an instruction from the SRA not to allow CADPI’s sugar refinery to operate.

Azcona pointed out that the SRA even issued CADPI with a refinery permit on Aug. 23, 2023 that is valid until Aug. 31.

“As of today, we have not received any official communication from CADPI about their refinery status, operation, or plan,” Azcona told The STAR.

According to Azcona, the only request they got from CADPI was to allow it to import raw sugar for its refining operations.