Because of its ethnicised workforce due to historical circumstances, the sugar industry has been used by the People’s National Congress (PNC) as a trope for accusing the People’s Progressive Party (PPP) of making decisions based on political or racial considerations, to favour its traditional base. The decision to embark on the Skeldon Modernisation Project, which included a new factory, has been severely criticised by the PNC when in Opposition, conveniently ignoring that the project was approved by all stakeholders including the World Bank (as a lender) and the European Union (as the major purchaser of our sugar).
The background is succinctly summarised by Booker Tate, which managed GuySuCo, and had been brought in by the PNC in 1990:
The Guyana Sugar Corporation (GuySuCo) approached Booker Tate in 2000 to assist them in developing their sugar industry with the intention of increasing sugar production, lowering operating costs and thereby improving profitability. Booker Tate carried out a viability and expansion study which recommended developing sugar production in the east of the country where agricultural conditions were more favourable than in the west. This resulted in GuySuCo deciding to construct a new cane sugar factory at the Skeldon Sugar Estate, in the Berbice region of Guyana and the Skeldon Sugar Modernisation Project was realised.
Project Scope: The overall scope of the project included the construction of an 8400 tonne cane/day sugar factory as well as the development of around 5000 ha of surrounding land to provide a consistent supply of high-quality cane. Technical: One of Booker Tate’s roles as the Client’s Representative was to provide a comprehensive and detailed factory specification which incorporated latest designs and technologies. The overall factory design was undertaken by a Chinese design institute and approved by Booker Tate…Included in the factory design is a cogeneration plant which allows the factory to generate 10 MW of electricity into the national grid, and provide a much-needed stable power supply for the region. Booker Tate’s role included the monitoring of construction progress and ensuring quality standards of workmanship were maintained.”
The factory was commissioned in 2008, but never performed to specifications and Booker Tate was let go. No one excepting the PNC has questioned the rationale for the Skeldon Expansion Project.
The PNC is now once again using the sugar trope to question the motives of the PPP when it announced that it would be reopening the four shuttered sugar estates after it returned to office next March. Opposition Leader Bharrat Jagdeo explained that the PNC was using only a financial analysis of GuySuCo’s balance sheet, which was in the red, to justify its closure, but instead should have used an “economic” analysis. But, the PNC Government had ignored its CoI – including its appointed Chair, Clive Thomas – which used those same financial criteria to recommend that the subsidies continue for another three years, during which the Corporation would embark on a stipulated consolidation plan, and be brought to a point of sale. Unlike what the PNC Government has been insisting, it would not have been “pouring money into a black hole”.
The economic analysis proposed by the Opposition is a standard tool used by Governments in making decisions even in this era of “market fundamentalism”, which preaches that the market should be used to make decisions such as those posed by GuySuCo. “In general, the focus of economics is more “big-picture” in nature, such as how a country, region, or market is performing. Economics also focuses on public policy, while the focus of finance is more company- or industry-specific.”
In the case of sugar, the Government would look at the externalities provided by GuySuCo, such as drainage for the coast; foreign currencies brought in; taxes paid; spending by employees in the communities and its multiplier effect, etc.
The US Government used these economic rather than financial criteria in 2008-2009 to inject more than US$1 billion, when it declared that its banks and auto makers were “too big to fail”. They were all turned around, as will the entire GuySuCo.