PAC probes cancellation of CDB loan for sugar industry in 2016

Finance Secretary
Sukrishnalall Pasha

The parliamentary Public Accounts Committee (PAC) on Friday scrutinised a multibillion-dollar shortfall in State expenditures that was flagged in the 2016 Auditor General report and for which, the cancellation of a loan for the Sugar Industry Mechanisation Project and the delays for several other infrastructural projects were cited.
During Friday morning’s examination of the Auditor General’s 2016 report on the Ministry of Finance, Opposition Member of Parliament (MP) Ganesh Mahipaul sought clarity on the shortfalls recorded on both the current and capital expenditures.
In response, Finance Secretary Sukrishnalall Pasha reported to the PAC that the current expenditure savings of some $2.8 billion were as a result of shortfalls from employment costs, the school uniform voucher programme, dietary due to reduced Cyril Potter College of Education (CPCE) dormitory students and old age pensioners not cashing their vouchers.
Pasha added that on the capital side, foreign-funded projects contributed largely to the $5.5 billion shortfall.
“The projects which contributed mainly to the shortfall included the Sugar Industry Modernisation Project, we had a savings of $400 million; sea defences, savings of $576 million; the electrification programme $1.2 billion; road network and expansion projects had a savings of $1.1 billion and the water supply and infrastructure programme had a saving $935 million,” the Finance Secretary indicated.
Pasha further told the Committee that negative variance reflected in the capital expenditure was attributed to the delay in award of contracts in the electrification programme; the non-award of three water treatment plants in the water supply and infrastructure programme; delays due to award and retendering of Sheriff-Mandela road contract in the road network and expansion project; and lengthy design review process, delayed tendering and award of civil works in the sea defences project.
With regards to the Sugar Industry Mechanisation Project, Pasha explained that based on the notes provided to him by his predecessor, former Finance Secretary Hector Butts, the loan for that project that was funded by the Caribbean Development Bank (CDB) was cancelled, hence the savings.
In light of this revelation, PAC Member and Opposition MP, David Patterson, who joined the proceedings virtually, questioned the reason behind the cancellation of the loan that resulted in the shortfall in the sugar industry expenditure. He also enquired when the decision was made to end the loan.
However, the Finance Secretary informed the Committee that he was not in possession of the details to respond to the questions raised by Patterson. Instead, he requested time to gather the details and lay it over to the PAC.

PAC Chairman
Jermaine Figueira

PAC Chairman Jermaine Figueira had even called on former FS Butts, who was present during Friday’s Committee meeting, but he too could not provide an explanation at the time and advised that the records be checked.
As such, Figueira eventually gave the Finance Secretary one week to provide the details of the loan cancellation to the Committee after no one else from the Finance Ministry’s team could have shed light on the issue.
In December 2014, the Caribbean Development Bank approved a US$7.5 million loan for Guyana to enhance the capacity of the Guyana Sugar Corporation (GuySuCo) to produce and harvest sugar cane on selected estates.
The goal of the project is to: reduce operational costs, improve mechanisation, improve maintenance of the extensive drainage system; secure irrigation and flood protection; and to provide for the development of critically needed non-sugar agricultural production such as rice. The loan was the CDB’s third intervention in Guyana’s sugar industry and it was expected that the project would have addressed several considerations that should result in improved productivity of sugar cane cultivation and sugar production.
However, the $400 million that was saved from the cancellation of the loan was initially allotted for: the purchase of machinery and equipment for semi-mechanical harvesting and land preparation; factory energy-efficient improvements at Albion, Rose Hall and Uitvlugt; and provision for institutional strengthening for the year under review.
But it was revealed in the 2016 Auditor General Report that the Appropriation Account showed there was no expenditure as at December 31, 2016. In fact, no budgetary allocation was made for the Sugar Industry Mechanisation Project in the 2017 National Estimates.
The CDB-funded Sugar Industry Mechanisation Project was eventually cancelled in full on August 1, 2017.
This was after the former APNU/AFC Government had moved to downsize the local sugar industry by closing the Wales, Enmore, Rose Hall and Skeldon Estates – a move which had sent over seven thousand sugar workers on the breadline.
The current PPP/C administration is currently working on rehiring some of those workers as well as reopening the Enmore, Rose Hall and Skeldon Estates. This is in keeping with promises the party made in its 2020 election manifesto.
While several hundreds of dismissed sugar workers have already been hired, the Rose Hall Estate recently held a recruitment drive to restaff in time for its October 2022 reopening.