Victorias may invest in power, railway

Manila Standard Today
by Jenniffer B. Austria


Sugar producer Victorias Milling Co. Inc. may invest in power, railway system, corporate farming and trading to remain competitive by 2015.


Victorias chairman Wilson Young said in an interview Tuesday following an stockholders’ meeting the company was taking steps to become competitive once the tariff rate on sugar dropped to zero under the Asean Free Trade Area by 2015.


The sugar miller is studying the possibility of developing a railway system within the sugar plantation and milling plant in Negros Occidental to reduce transportation cost.


Young said transport accounts for 40 percent of the company’s total production cost.


He said the company could talk to other sugar milling companies operating within the area, including Hawaiian Philippine Co. Sugar, Lopez Sugar Corp. and First Farmers Holdings, to jointly develop the railway system.


The company is considering the possibility of building co-generation power plants to supply its own power requirements.


Young said the company would venture into corporate farming to ensure ample supply of sugar cane.


He said the local industry would face stiff competition from cheap imports from Thailand once tariff rate on sugar was lowered to zero by 2015 from the current rate of 35 percent.


Production cost of sugar in the Philippines costs P600 to P650 per metric ton. Thailand’s cost, meanwhile, stands at between P400 and P450 per ton.


“So all these plans that are studying are in preparation of Afta,” Young said.


Victorias is the largest sugar mill operator in the Philippines and one of the largest in Southeast Asia.


Trading of Victorias Milling’s shares has suspended since 1997, after the company encountered financial difficulties due to its failure to effectively contain rising overhead costs against a backdrop of falling domestic prices of sugar, and increasing competition from both new and expanded sugar mills and refineries.


The company in 2002 presented an alternative rehabilitation plan that was approved by the Securities and Exchange Commission.


Shares of Victorias Milling were last traded on Oct. 8, 1997 when it closed at P0.29.