Sugar: Shifting the blame around - EntornoInteligente /

SUGAR and bauxite were seen as two of the major productive sectors in Guyana for many years. Both of them have had a very large workforce of Guyanese at all levels, with a relatively small amount of expatriates also working mainly in some of the management positions within the sectors.

But even as the tide turned and the then People’s National Congress (PNC) government demitted office in 1992, with the People’s Progressive Party (PPP) simultaneously taking office, serious decisions were already being made about the two industries, as well as others.

The PNC government had already started a reprogramming of these and other industries. In fact, part of that reprogramming had to do with the Economic Recovery Programme (ERP), which was started in 1989 by the Desmond Hoyte-led administration and the International Monetary Fund (IMF) playing an integral role in the ERP.

However, by the time the PPP took office in late 1992, there was already a Country Report by the same IMF (Country Report No. 99/52), which stated in the summary:

“By 1992, inflation had declined markedly; the fiscal and external deficits were reduced substantially; and private and official capital inflows had risen significantly.”

There was also a report by the Private Sector Commission of Guyana, which stated: “The Guyana economy has been a free-market economy since the government instituted an Economic Recovery Programme in 1989. (This was under the Hoyte-led administration)  This policy resulted in high rates of growth up to 1997 after which growth stagnated for several years.”

Further, in a report delivered by the then General Secretary of the PPP, Dr. Cheddi Jagan, to the Central Committee of the 25th Congress, held at Queen’s College, December 3-4 1994, he told the Congress:

“Privatisation, through a Booker/Tate management contract, coupled with improved wages, salaries and bonuses and proper collective bargaining arrangements with the unions led to unprecedented growth of over 20% per year in 1991-92. Even with the rundown machinery, the new management achieved in 1992 what it had planned to achieve in 1995!” The 1991-92 period referred to by Dr. Jagan was under the Desmond Hoyte PNC-led administration.

Sugar and bauxite The IMF had crafted and proposed to government that there be privatization of the sugar and bauxite industries, among others by 1993. However, in 1993, the PPP government was already in power and would have had to make the decisions.

Amidst the many challenges faced by the bauxite industry, it continued to be the main, and in some cases, only source of livelihood for most of the people living in MacKenzie and Wismar, as well as some of the outlying areas.

Therefore, it can be understood why the then opposition PNC, trade unions and other interest groups fought hard against a PPP’s decision to privatize bauxite. Nonetheless, in December 2004, the Linden Bauxite was privatized by joint shares of Cambior having 70% shares and government 30% shares. The Cambior shares were sold to BOSAI CHINA in year 2007 and government retained 30% share. Clearly, while the PPP accepted the IMF’s privatisation remedy for the Bauxite Industry, it retreated when it came to doing the same for the sugar industry.

White elephant Under Dr. Cheddi Jagan, the PPP negotiated very hard to convince the IMF that the social impact of privatisation would be deadly and that the industry had hopes under government ownership.

The PPP accepted Booker Tate – the foreign management team that the PNC government had brought in during 1990. They then embarked on one of the largest investment in Guyana’s history with a plan to expand the industry to produce more than 400,000 tonnes annually.

The plan was to have a ‘state-of-the-art’ sugar factory expanded and constructed at Skeldon. This was going to see some 100,000+ tonnes of sugar produced annually with a parallel increase of cultivated land to supply the factory with sugar cane.

Skeldon ended up two years late in-the-making by 2009; then it became obvious that the government had created a white elephant. While the old factory that had been regularly producing 50,000 tonnes annually was dismantled, the New Skeldon factory was never been able to reach 40,000 tonnes, even when the cost for production doubled from what it was before.

By 2010, Booker Tate was deemed responsible for the failure and was shown the door. Further, the skyrocketing debts created for the sugar industry especially through Skeldon, is naturally causing the industry to slide downward economically.

State Land Resettlement Commission Now, there is no PNC anymore, but the coalition government of the APNU+AFC is currently saddled with bringing some relief to sugar workers. Just recently President David Granger said that his government plans to establish a State Land Resettlement Commission, adding, “We will not leave the sugar workers on their own.” This is in addition to the billions already invested to bring relief to the industry.

LINK ORIGINAL: Guyana Chronicle

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