Dear Editor,
In 2009, President Jagdeo commissioned a US$200 million/G$40 billion new sugar factory located at Skeldon, Berbice. This new sugar factory was commissioned when the European Union was ending its 32-year-old sugar trading pact with Guyana and 17 other African, Caribbean and Pacific sugar producing countries.
Under the old agreement, these ACP countries received guaranteed, duty-free access to the European Market for their raw sugar cane. This protocol, at times gave these ACP producers a guaranteed price that was about three times above market prices. The discontinuation of the EU’s Sugar Protocol was not abrupt since the administration at that time had been forewarned years before.
The phased price cuts by the EU amounted to a 36% drop in prices and some G$7 billion in losses for Guyana annually. Evidence showed that sugar has been on a downward slide in the region as Belize, Barbados, St Kitts and Trinidad and Tobago, had abandoned sugar.
Jagdeo’s Skeldon factory turned out to be the worst performing sugar estate in Guyana, its production even lower than the older, less modern factories. Over the years, the Chinese-built factory has definitely accomplished two things: the loss of billions of dollars and massive debts. Debts in excess of billions of dollars have been owed to the Guyana Revenue Authority (GRA), the National Insurance Scheme (NIS), and to regional and international banks and funding agencies.
Losses further incurred by the company are as follows: G$17.5 billion in 2014, G$18.1 billion in 2015 and G$12.1 billion in 2016. These losses are attributed to high production costs, low productivity yields, factory deficiency, lack of capital resulting in high production costs, too many workers, loss of the EU’s preferential treatment to ACP countries, Guyana’s inability to compete with large producers like Thailand and Brazil, and the inability of the new Skeldon factory to operate at maximum capacity.
In 2009, Jagdeo declared, “The Skeldon factory was not delivering the expected results and as a result the sugar industry is in trouble.” He said this when he was speaking at the commissioning of the Guyana Water Inc’s G$1.4 billion water treatment plant in Corriverton, Berbice. Jagdeo stressed that his government is committed to the industry and noted that sugar is the basis of much of the economic activity in the Corentyne. “If sugar is not growing in this Corentyne, this place would be a ghost town…sugar not only pays the sugar workers but the shopkeepers and everyone else – the market vendors and every single person here.” He said, “It’s the largest economic activity in this area”.
Jagdeo was obviously concerned at what would become of the community should there be a downscaling of the sugar industry.
In 2014, GuySuCo’s former Finance Director, Paul Bhim, stated that GuySuCo was indebted to both local and foreign banks, suppliers, the GRA, the NIS and the Sugar Industry Labour Welfare Fund Committee to amounts totaling G$58 billion. The company also owed another US$112 million/G$22.4 billion loaned to the Guyana government for the new Skeldon sugar factory by the World Bank, China’s EXIM Bank and the Caribbean Development Bank.
The Skeldon expansion project has been the most expensive project to date in Guyana. Shortly before he left office in 2011, former President Jagdeo said he would have personally made it his duty to ensure that the problematic Skeldon factory is fixed, which never materialised.
Industry experts are forecasting that sugar prices will remain depressed for some time as countries like Brazil and Thailand have increased their output, helping to flood the world market. GuySuCo itself has said that there is glut in the world market of almost two million tonnes. This has driven prices down.
What is of greater concern to the public was the increasing subsidy required to ‘bail out’ the industry’s debt. In 2012, GuySuCo received a subsidy of G$4 billion, G$5.4 billion in 2013, G$6 billion in 2014, G$12 billion in 2015 and G$11 billion in 2016 with a projected G$18.6 billion in 2017 for the industry’s survival. For all of the above reasons, the country could not continue to flog a dead horse.
Guymine
On the flip side, let us examine the PPP’s attitude towards Guymine and Globe Trust. On the assumption of the PPP/C to office in October 1992, Linmine’s production level was cut for the following year to 250,000 tonnes. This deliberate decision to drastically reduce production was communicated to the bauxite unions by former PPP/C Prime Minister Sam Hinds, who also advised that jobs would be cut.
Clearly, here it was not a case where bauxite had a production problem but a deliberate decision taken by the government to reduce production and lay off workers. The decision to reduce production led to the loss of markets as customary buyers had to go elsewhere to meet their demands. The government made its position very clear that bauxite would be privatised and sugar would remain a state entity. In privatising the bauxite company in Linden, the PPP/C government refused to listen to legitimate concerns and pleas by the workers, residents, unions, the then PNC opposition, and others.
It is important to note that bauxite workers’ benefits included electricity and water. Therefore, Mackenzie, Kwakwani and Aroaima, which consisted of mostly bauxite workers, benefited from the bauxite company via subsidised electricity and water costs. Even though thousands of workers would lose their jobs and Linden would become a ghost town, no effort was made to save Linmine by Jagdeo and the PPP Government. Those affected were primarily of African descent.
Globe Trust
Globe Trust began operating in April 1991 and was licensed in 1999 to conduct depository financial business with authority to engage in Trust business. However, in 2000 and again in 2001, a series of inspections by the Bank of Guyana found the institution to be in breach of the Financial Institutions Act.
More than 5,000 depositors, whose savings amounted to almost G$800 million, lost access to their funds after the Bank of Guyana under the instructions of Finance Minister Saisnarine Kowlessar liquidated Globe Trust in 2001. For many of these depositors, this was their life savings.
Former President Jagdeo had said that he had no plans to use taxpayers’ money to bail out the “fat cats.” Finance Minister Kowlessar also stated that the Globe Trust failure would not impact on the financial system as it represented less than one per cent of the asset base of the financial sector.
Globe Trust challenged this liquidation via court litigation, and the then Chief Justice Carl Singh ruled that Bank of Guyana “manifested its misconception of its powers” and that the determination by the Bank of Guyana that Globe Trust could not be restored to financial soundness was made “in a manner that was unfair to Globe Trust”; and that “Globe Trust had been “unfairly treated.”
The premature and high-handed manner in which the Bank of Guyana acted was obviously politically driven. This is another element of the unjust treatment meted out to Guyanese of African descent by the PPP.
In conclusion, after taking office in 1992, the PPP made haste to privatise Linmine (Linden’s government-owned bauxite company) which meant job cuts to a PNC stronghold and hence the destabilising of the entire economy of the township.
Jagdeo often highlighted the fact that the EU cut the preferential sugar prices by 36%, but failed to mention that between 2006 and 2017, the EU provided a total of G$34.5 billion in budgetary support to Guyana to compensate for the cut in price.
Even after the bailouts were given to GuySuCo which is to the tune of billions of dollars, Jagdeo had not once considered privatising it. The above, verifiable information proves Jagdeo and the PPP have wasted billions of tax payers dollars trying to raise GuySuCo from the dead, as a means of securing votes.
There has been a stark difference with the PPP and Jagdeo’s attitude toward Globe Trust, Linmine and GuySuCo. Could it possibly be because Linden and Georgetown are traditionally coalition strongholds? There was no sympathy or any consideration for the residents of Linden, whose population is over 29,000 and who were mostly employed at Linmine.
Yours faithfully,
Jermaine Figueira
Member of Parliament
Region Ten
