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Business and electricity: chicken and egg

Oct 21, 2009 Editorial

The Minister of Commerce was reported to be “disappointed” that there is such a paucity of agro-processing facilities in Guyana, much of our agricultural produce is exported to other countries where they are processed and packaged and of course, re-exported at huge mark-ups.
These countries therefore make a killing while we remain stuck as primary producer for another host of goods – a role that has been our lot from the moment we were colonised.
But if the Honourable Minister has taken the time to reflect on why our businessmen have not plunged into the agro-processing business, he might have been “rueful” rather than “disappointed”; rueful that he and the rest of his government have not seemed to have grasped the elementary fact that there can be no quantum leap in agro-processing without a reliable, cheap and sustained supply of electricity.
And without the latter, even the few diehards who have stuck it out, will be forced to fold up their tents. Talk about “pricing, packaging and presentation” are just the regurgitation of  slogans that have no meaning for the poor entrepreneur in Guyana who has to deal with the primeval reality of wondering every morning whether he has electricity to process the produce he had procured at great cost from far-flung farmers and transported to his factory at additional cost.
How many times such produce had not had to be dumped because of the dreaded “blackouts”? Who had ever compensated him for his loss? Who had ever paid him or his workers who had to sit around for hours many a day, waiting stoically for the power to resume? And not to talk about the damage to machinery when the power did return, but at such low voltage that the motors creaked and groaned to accomplish their designed task and inevitably broke down. No machine has been designed to function at the voltage fluctuations and power outages that is the norm in Guyana.
And what has been said for the agro-processing sector (such as has survived) can be extended to all other manufacturing entities in the country. The larger ones, such as Banks DIH, have managed to survive by generating their own power. But this is not feasible for the new entrants in the manufacturing arena: the competition from other countries is just too fierce.
And this opting out from the national power grid by the largest companies leads to another chicken and egg question. The cost of power, high to begin with, escalates when the entire overhead has to be spread over a smaller customer base.
As it is, the entrepreneurs that the goodly Minister spoke optimistically of attracting, will have to pay at least twice for the cost of power than say, neighbouring T&T, where most of the light manufacturing has gravitated to.
Cost of electricity is a major expense in manufacturing and even those entrepreneurs that can afford their own generators would balk at the added cost over time.
The administration has of late indicated its dissatisfaction with the situation in the electricity sector. GPL for its part has grotesquely promised “things will get worse before it gets better”.
Was that supposed to provide comfort to anyone, including the manufacturing sector? After three decades of such promises the latter body (not to mention the ordinary consumer) may be excused for snickering cynically. But what makes the situation worse is when officials, such as the Minister of Commerce utter their feel-good platitudes without taking cognisance of the ground reality. This obduracy simply aggravates the national mood of cynicism.
What the administration has to do is to put on hold any talk of expansion of our manufacturing base until they can provide an adequate supply of electricity, not only for our present needs, but for the projected expansion.
The chicken of agro-processing or of any other manufacturing activity will not arrive before the egg of a reliable, cheap and sustainable electricity supply is assured.

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