THE PPP SHOULD MAKE NO MORE DEALS

Nov 30, 2008 Features / Columnists, Peeping Tom

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Burnham used to think big. The PPP today is talking big.
Burnham had pipe dreams about a number of large projects such as a bicycle factory, a leather factory and glassworks plant. He had big ideas, too big for his government’s ability.
We all know what happened to these projects. They flopped showing how true VS Naipaul was about our ability to govern ourselves. The greatest pipe dream of Burnham was of course his desire to build an alumina smelter.
For years he talked about it. Just as how the PPP is now beginning to talk about an alumina smelter. Burnham however was not a stupid man. Neither was he bluffing. He knew what was needed to get that plant going. He knew that the main prerequisite was not Guyana’s expense to extract alumina, but the power required to operate the smelter.
This is one of the reasons why he embarked on the Upper Mazaruni Hydroelectric Project (UPHD). He knew that massive amounts of energy were needed to operate a smelter and the only source from which that power could come in Guyana had to be hydroelectricity.
He also knew that in order for such a smelter to be globally competitive, this power had to be cheap, all the more reason why it had to be hydropower.
Over the past few days, I have seen a great many Guyanese becoming excited by the news that BOSAI is contemplating an alumina smelter in Guyana. Contemplating a smelter and building a smelter are two completely different things.
Let me therefore deflate the bubble that is floating around Guyana and the rest of the world about a smelter being built in Guyana. Before a smelter is built those building it would have had to have done a feasibility study so as to obtain the financing.
This feasibility study has not yet begun so it is sheer daydreaming to be speaking about building a smelter in Guyana.
One of the things that would have to be satisfied before any decision is taken to even consider such a proposition has to be the availability of cheap, reliable and adequate energy to fire the smelter. Do not be fooled about the talk about the Amaila Falls project. That will only generate about 140 MW of power, and it would have to be a very small smelter indeed to run on that power.
The first problem is therefore the availability of power. The second problem is the cost of that power. I am not convinced that we can deliver hydropower cheap enough to make a smelter feasible in Guyana.
I am therefore not getting excited about any smelter. I am however making a prediction. I am saying that in my lifetime, Guyana is not going to have an alumina smelter.
I would like therefore for the Guyanese people to see beyond this smelter issue and to pay fine attention to these deals that the government is entering into with foreign companies. I said a few weeks ago in this column that after what happened with the Sanata Complex, the Jagdeo administration should not be allowed to sign any more major deals in Guyana. I am quite serious and I am disappointed that the opposition in this country has not moved a motion of no-confidence in the ability of the ruling administration to safeguard Guyana’s interests in these deals.
I am not worried about whether we will have a smelter. I do not think it will happen. I am worried that we are not being told as to just what are the other terms of the deal that has been entered into between the government of Guyana and BOSAI, including the ten-year tax holiday. Is this tax holiday automatically renewable?
Why would a company plan to invest one billion US dollars and only have a ten-year tax holiday? That makes no sense to me. I am therefore asking what more is being offered to BOSAI that the public is not yet aware of.
The Chinese are now making major investments in many countries in order to gain resources to sustain the boom back home. China is on a hunt for resources, all forms of resources; they have an insatiable demand for these resources and therefore they are looking for our resources also.
I see no economic sense in BOSAI building a smelter in Guyana. I see a great risk given the cost of extracting our bauxite. I cannot envisage BOSAI putting down an investment greater than our gross domestic product, not after knowing that China also produces bauxite that is cheaper than Guyana’s.
I am interested therefore in the bauxite aspect of this deal between Guyana and BOSAI. I would like to know just what it entails. I would like to know whether our bauxite mines have been pawned to BOSAI. I am asking whether the Chinese have been given rights to extract our bauxite and how we will benefit from this extraction of our natural resource.
All Guyanese have a right to know because these resources belong to the people of Guyana. It is not for the PPP to do with as they please. The time has come for the Guyanese people to know the full details of this deal. The time has come for the people to open their eyes to what the PPP is doing.
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