Anyone who has observed the tribulations that have gripped the sugar industry over the last decade and in particular the Skeldon estate would have seen important signs in an address on October 4th by Vice President Bharrat Jagdeo.
During a meeting with former sugar workers at Rose Hall and Skeldon who had been unconscionably severed by the Granger administration and left to their own devices, Mr Jagdeo delivered a sweetener first. Each of the severed workers is to receive $250,000 on top of the severance package they have already received. This additional relief amounts to $1.75b and will raise legitimate questions about the rationale and framework for the decision particularly as there other groups who have suffered similar injustices and deprivations.
Mr Jagdeo then went on to speak about a much larger issue – the future of the Skeldon estate and permanent jobs for thousands who had been severed. Given that the PPP/C had pledged during its election campaign to reopen the shuttered sugar estates – no longer possible at Wales since the factory has been dismantled – there would no doubt have been great interest in what he had to say.
While the message was not coming directly from President Ali, it was being delivered by the man who is seen as the force behind the party’s return to office and also the architect of the original failed plan to revive the fortunes of GuySuCo by investing heavily in Skeldon and a Chinese-built factory that didn’t deliver the goods.
After he had spoken, it would be clear to many that Mr Jagdeo was telling the former Skeldon workers that there was not much hope of a return to the way things were at the estate. There would probably be a shifting of some of its assets into other areas and workers had to begin preparing themselves for other occupations such as in the oil and gas industry.
Mr Jagdeo first pointed out that while re-employment has started, the recent flood caused the industry to suffer about $4B in losses. Nonetheless, he said that discussions had been ongoing with a number of persons who want to work with the government to reopen the Skeldon Estate but one of the issues is that most of the potential investors do not want to grow cane for sugar but rather sell power to the government from the Cogeneration Plant there.
“And they want a price for the power which is extraordinarily high and a long-term contract… If we buy power at that level it will be about …twice as expensive and therefore we would not be able to cut people’s electricity prices, so the proposals have surrounded that”, he said.
As such, the Vice President stated that decision makers are now zeroing in on the possibility of spinning off the Skeldon Estate to other types of businesses “some linked to sugar and some linked to other things so that you can still get maybe about two to three thousand people employed back.” He then noted, that while not many persons want to take part because of the scale of the project the government will have to work to find a way to get it done.
Those statements would be read to mean that there is no interest in the investment community to restart a cane sugar operation as there is little prospect of success and that the only possibility at the time was power generation and unspecified spin-offs. Mr Jagdeo didn’t appear to countenance the prospect of the government being the sole participant in an attempted revival of Skeldon as it is well known that the failed expansion project there was the prime reason why GuySuCo was dragged down over the last decade and the cost of production skyrocketed compared to the limp world market price for sugar.
At some point, instead of wasting resources and leading people on, the government has to confront the reality that Skeldon was a colossal public sector failure – one that should invoke some caution in the multitude of big-ticket projects being presently embarked upon – and the best use has to be made of the remaining assets even if these are in non-sugar areas.
The difficulties facing the government extend across the entire sugar industry and there is no escaping this. Mr Jagdeo pointed out that since entering office last August, the government had put in about $14B into the sugar industry and was spending more than the revenue obtained, a situation that has subsisted for a number of years now.
However, he said that he had no apology to offer for working to reopen the estates since from the social impact side “it is important and necessary spending.”
The mid-year report released by the Ministry of Finance this month (why is it so late?) stated that “Further studies are being conducted for viable operation of (the) Enmore and Skeldon factories”. This line would raise even further concerns about any reopening for either of the two. The mid-year report also underlines how mightily sugar has fallen in terms of its share of GDP. At half-year in 2018 it was 0.4% of GDP and this year at 0.2 percent compared to rice at 7.2% and 3.5% respectively, gold at 10.8% and 5.1% respectively and the new driver of the economy petroleum at 0.7% and 40.8% respectively.
A major focus for the rest of the year will be on a packaging plant for the Blairmont estate and to possibly expand packaging capacity at Enmore to gain more for the value-added market with less focus on bulk sugar.
During his discussions with workers Mr Jagdeo also said that the government has made a decision to expand GuySuCo’s Port Mourant Training School to offer courses to prospective workers in the oil and gas sector and that Professor Clement Sankat, who was at the University of the West Indies will head the institution. He asked Minister of Agriculture, Zulfikar Mustapha, who was present at the meetings, and others within the region, to create a list with 400 names so as to get the training started.
The signs are clearer than ever that the sugar industry at Skeldon, on the East Coast and other places will not return to the way it was before and that all stakeholders will have to confront this reality while trying to minimise dislocation to the thousands and their families who have depended on this sector.
