Diversify our Economy – “Let us start nah”

Aug 06, 2008 Features / Columnists

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INTRODUCTION:
This weekend, at the PPP Congress, I was impressed with speaker Donald Ramotar who is unknown for his economic view, but who spoke about economic diversification, while the President spoke only about his achievements in passing parliamentary Bills instead of measuring his success on whether or not we were better off in our pocket books and whether we have the ability to take care of our families.

He failed to address the excessive tax burden he has placed on us with the 16 per cent VAT and the $33 that is taken out by the government of every taxable $100 we make.

Over the last five years, many of us in the private sector have harped on this topic, especially as it relates to moving from crops that perish because of our rainy seasons to crops that can sustain weather conditions, and moving from sugar to ethanol.

As a continuation of my Sunday August 3 column, we must concentrate on Brazil’s success as part of our economic future in creating wealth for us.

THE FUTURE WITH DIVERSIFICATION:
Over the last four years, many of us have called to diversify from Sugar and Rice to large scale growing of key products such as peppers or growing more sugar for production of ethanol. The technology for ethanol was offered to us by the Brazilian President in 2003.

Had we listened to him, today with the high fuel prices, we would have been smiling that we look into the future in 2003 and solved a portion of our energy crisis in that year that would have benefited us now in 2008.

Had we also continued President Burnham’s dream of Hydro-power, we would have been smiling today with the high fuel prices.

In addition, with the European Union’s decision to halt preferential pricing to ACP countries, the technology on ethanol offered by the Brazilian in 2003 certainly offers us another viable means of sustaining our sugar industry.

However, had we played our cards just right, ethanol would have been more than just a quick fix in the face of a scary fiscal situation.

It would now behove of us to aggressively pursue this alternative given the current crisis of the sugar market, and the current oil crisis that puts the country at extreme economic risk.

ABOUT BRAZIL’S SUCCESS:
Brazil, the world’s leading producer of sugar, is also the world’s leading producer of ethanol. The country started out on a small scale simply to make itself less dependent on the rising cost of petrol fuel, the type of fuel that keeps our cars on the streets each day.

However, as the demand for ethanol consistently grew, Brazil became a model for research and implementation of this new fuel.

In fact, demand for ethanol in Brazil is so high that it is expected that two out of every three new cars sold will be Flex cars, short for flexible fuel. Flex fuel is a mixture of ethanol and petrol.

“We” Guyana could have actually been on the front end of a trend that could have solidified our economic future in the global market.

If this technology was actually implemented and some strategic plans laid out for its use, ethanol would have held great promise for Guyana. “There is still time; let us start nah.”

BENEFITS OF ALTERNATIVE FUEL:
The immediate benefits would be internal. Most new and many older vehicles are capable of running on E10 – a mixture of 10 per cent ethanol and 90 per cent unleaded gasoline. Much of the gasoline sold in the United States is E10.

From the very start, Guyana can start using this mixture with ethanol that is produced right here in the country and balance our high fuel prices.

In time, as in Brazil, we can start to use gasoline with a higher mixture of ethanol – decreasing our dependence on high priced oil.

The soaring prices of oil have recently taken its toll to the extent that many have cut back on their driving and some have halted the use of their cars altogether.

High fuel cost has a rippling effect on our citizens as it affects more than just driving, but the cost to send our children to school goes up, thus reducing any discretionary dollars our families may have. Hence the immediate influence of ethanol production on our economy could be quite positive.

One more unexpected phenomenon in Brazil is that Flex cars are seeing a higher resale value than cars fuelled by petrol.

It seems that many are now viewing Flex cars as the wave of the future and the process of weeding out the remaining petrol cars is already in full swing.

If this is true and the trend carries over to other countries now strapped by oil prices, Guyana stands a chance of cashing in on its colonial heritage in sugar crops by simply applying some modern technology and innovation.

However, the ever-looming question remains as to whether Guyana will actually be able to implement this new technology.

NEXT STEPS:
The Brazilian Ambassador mentioned the possibility that a large plant for bio-fuel could soon be added across the border.

We should be all over this and see how we can expand operations to be part of this solution.

Unless the government is aggressively working with the private sector in true public/private partnership (P3) and is truly ready to get this new technology up and running, we could be looking at one more dynamic potential wasted as we watch another opportunity pass us by.

CONCLUSION:
So as the politicians preach to their constituencies this weekend at their congress, they should instead be creating a plausible strategy to become an alternative fuel production country like our neighbour that could well be Guyana’s ticket for a diverse economy and an infusion of jobs and wealth for our citizens.
Send your comments to email: peter.ramsaroop@gmail.com and/or Website: www.visionguyana.com

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