Former president Bharrat Jagdeo yesterday maintained that the “incompetence” of UK-based sugar management firm Booker Tate was responsible for the disastrous execution of the Skeldon Sugar Modernisation Project (SSMP), including the US$110M factory that is still unable to produce at an adequate rate.
“There is a deal of incompetence. There is a good deal,” Jagdeo told a news conference yesterday at Freedom House, where he also said the sugar industry would need a much larger bailout than the $12B that is to be funnelled into it by the APNU+AFC government.
He said the politicians were reliant on the advice of technical experts and at the time of the drafting of the SSMP the government had engaged and hired Booker Tate to be project manager.
“What we did was, our plan was to increase sugar production and not the politicians did this plan, at that time Booker Tate was managing the industry… so they worked with some of our board members at the time to come up with a plan,” he said.
Jagdeo added that the factory was designed to have the capabilities to produce sugar for US$0.12 per pound but the factory encountered major problems from the time of its commissioning in 2009.
“If I had decided on this myself and come up with all these ideas, I’ll take full responsibility but we paid people to do it… the reality is that Skeldon could still be fixed,” he said.
“Because this is a turnkey contract, we needed somebody to look out for our interest, so we hired the Booker Tate team, a project team. Remember, they were getting fees as managers of GuySuCo outside of the fees they were hired as project manager for Skeldon, the same Booker Tate group, separate fees negotiated with them, they were supposed to look at design, oversee the implementation of the project, ” he added.
Jagdeo said that as a result of the numerous issues, a decision was taken to pursue litigation against the project manager. “We said we are not going to pay you, the project managers, because you were supposed look out for our interest. They were the best technical people in the world,” he further said.
The former president was evasive in his answering when asked why legal action wasn’t taken again the Chinese contractor China National Technical Import and Export Corporation (CNTIC). He stated that resources were withheld from the CNTIC. Jagdeo noted that the contract placed heavy emphasis on the UK-management firm’s role in the design and procurement of materials.
In February this year, the High Court ordered GuySuCo to pay £664,750.91 ($204 million) for fees owed during the period it managed the industry. Booker Tate filed two claims in September, 2010; one over the controversial Skeldon project and another for corporate management services it provided to the sugar corporation for an agreed period.
The former president trailed off when he was asked why the government would invest in the US$200M Skeldon project while knowing that the European Union (EU), Guyana’s largest purchaser of sugar, was reworking its Common Agricultural Policy. He noted that the vision was to lower production costs to compete. Jagdeo said the EU agreement was long term and that Guyana did not envision the ending of preferential pricing.
“When a company had to survive on about 60% of its pivotal revenue, it’s a whole range of problem for the company. We could have gone the other route of privatising or shutting down the industry, basically, because at that stage private sector loses interest if you can’t, if the review won’t allow you to make money. Why would I invest my money?” Jagdeo noted. He said the 40% cut in revenue by the EU meant drastic measures had to be taken, hence the SSMP.
Meanwhile, Jagdeo said that he would not be addressing the ongoing Commission of Inquiry into the sugar industry as he thinks that it is just a “show” because a decision to privatise sugar has already been made. He further charged that the board would not even have a say in the eventuality and he wanted no part of any structure aiming at dismantling the sector.
He also took a jab at the current administration for rehiring Errol Hanoman and Paul Bhim to run the corporation, while noting that the APNU+AFC while in opposition had consistently called for them to go.
“I am very happy that the persons who managed the sugar industry between 2009 and 2014 were rehired by APNU to run the industry again,” he said, while recalling that the former opposition accused the PPP/C government of trying to put square pegs in round holes only to turn around and hire the same two men.
Jagdeo emphasised that the sugar industry has to survive because of the impact on the Gross Domestic Product, the implications for exchange rates and macroeconomic stability.
“I believe sugar can work. I believe you can still do the distillery and the refinery, so many other things with sugar. If you are prepared to invest in it, the money will come back in the long run,” he said, while noting that the government kept bauxite afloat long enough to pull in investors. He said of the current state of sugar and GuySuCo, “The costs of production is so high. Why would a private investor want to buy into the sugar industry?”
