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Mar 20, 2009 Editorial

The news that the Skeldon Sugar Modernisation Project (SSMP) has begun to produce sugar in commercial quantities must be music to the ears of all Guyanese who have their country’s interest at heart.
While Minister of Agriculture, Robert Persaud struck a responsible note of caution in pointing out that the test period for the new factory should properly be seen as lasting for the entire crop, it would appear that we have grounds for believing that the largest single investment in our country’s history is finally coming on stream.
The government has come in for much criticism, much of it unwarranted, about the failure of the Chinese contractors to deliver the factory on schedule.
Not that the delay was not disruptive but no one has produced any evidence that the government had fallen down in its due diligence checks and that the company was unqualified to take on the job.
In any event, as Minister Persaud once again reiterated, liquidated damages are contractually built in to deal with the contingency of late delivery. It is our expectation that all losses suffered by the Guyana Sugar Corporation (GuySuCo), including the revenue that would have been generated if the projected production had been delivered, would be recovered. There must be a full accounting at the end of the day.
What was most encouraging in the news reports of the official inspection was the openness of the Minister about the state of the project.
This is as it ought to be and we hope that all parties involved will take a positive approach in evaluating the information gleaned. We have emphasised on more than one occasion that the sugar industry is too important to our national success for it to become political football.
The inclusion of PNC Member of Parliament and member of the Economic Services Committee, Tony Vieira on the inspection team is a positive signal and we hope that his comments will be taken in good stead; they appear, at least, to have been delivered in considerably more measured tones than his earlier interventions.
His early warnings on the bottleneck that could arise on account of the failure of private farmers to meet their promised 30%+ of the required production of sugarcane has been confirmed by the Minister.
While this percentage is high, it should be noted that none of the present naysayers complained in the early planning stages when the World Bank insisted on this level to satisfy its doctrinaire position on “private” involvement.
Even though the government has involved itself assiduously to assist private farmers getting on stream, it would appear that, as the Minister pointed out, “other options” would have to be considered. Read GuySuCo taking up the slack.
There had been concerns raised in the press also about the drainage and irrigation demands that the increased acreage precipitated to ensure that the SSMP could be viable. While the Minister acknowledges that there has been “some slippage”, we believe that the overall D&I requirements should be given another audit based on the experience gained on the expansion up to this point. Taken in tandem with other projected usage of the lands behind the Skeldon expansion, it would appear that more work may be needed than is estimated right now.
Minister Persaud was also quite open on the marketing challenge that GuySuCo would be facing as it struggles to deal with the final price cut by the EU and the world market price for sugar – which continues to be below our cost of production.
Apart from the efficiencies of scale that the fully operational SSMP would introduce, its generation of electricity from bagasse that would eventually be sold to the national grid points to the need for some urgency to be placed on plans to diversify further within the industry, so as to lower overall costs. This is the preferred direction in which to proceed rather than the constant harping from some quarters on the wages of sugar workers. After all, the world crisis demonstrates on the widest possible scale, what denying workers purchasing power could precipitate.

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