THE IDEAS ARE GOOD, BUT THE DEALS RAISE EYEBROWS

Mar 08, 2012 Features / Columnists, Peeping Tom

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Today‘s column is a continuation from last Monday when it was argued that while Guyana does need hydroelectricity, it is important that we strike the right deal. So far, the right deal has not been struck.
The position of this column, indeed that of this newspaper, is not in opposition to hydroelectricity, ethanol production, or any other great ideas that would benefit the country. The objection has always been the secrecy of the deals and the fact that many of them seem designed to benefit friends and cronies of the administration.
The One Laptop Per Family project is a good idea. It may have been borrowed from the Trinidad government, but it is still something that is good for Guyana. However, as we have seen, there were and still are problems with this project.
The fact that so many of the deals signed in recent years have attracted controversy does not mean that Guyana should dump the plans for hydropower, for countrywide distribution of laptops, or for ethanol production. These are all sound ideas and Guyana is ready for these ideas, but not necessarily the deals that have been signed to bring them into being. The ideas are good but the arrangements are questionable.
Take for example hydroelectricity. As alluded to last Monday, it makes no sense for there to be an US$840M investment when the investors are not taking any major risks and have a guarantee of a 20% return on equity for twenty years.
At the least for this sort of pay-off, Guyana should benefit from electricity tariffs delivered to GPL which are below $20 per KWH.
Guyana needs hydroelectricity. Burnham had plans for hydro, but his ambitions were always too big for his abilities, and the whole thing flopped and millions went down the drain.
Now that hydroelectricity is about to become a reality in Guyana, it is important that we get a good deal and avoid being ripped off.
But while Guyana needs hydroelectricity, it does not necessarily need an ethanol plant the size of which is under consideration. There is also a moral issue involved here which has been raised in these pages in the past. It is morally reprehensible for Guyana to be diverting lands that could be used for food production into bio-fuels.
The plans to use agricultural produce for fuels will further drive up food prices, and Guyana as a country which in recent years saw imported food prices rise, should never go down this road, not when millions around the world are starving.
Even if a case can be made out that morality does not provide jobs and income for people, there will still be a basis for objecting to the setting aside of lands in the Canje Basin for the production of foodstock which will be converted to ethanol.
That basis is that the president of Guyana himself sees Guyana emerging as a major agricultural producer since he predicts that food demand globally will increase.
The plan therefore, hatched under the previous administration, to sign a MOU with a Trinidadian company to examine the feasibility of establishing an ethanol plant in Guyana, is therefore in direct contradiction to what the new president envisions for Guyana.
The AFC, during the election campaign, had made out a credible case for the sugar industry moving into higher value-added activities. GuySuCo is trying to do this already in a modest way through the packaging plant in Enmore. The AFC saw the diversification of some of the sugar estates into ethanol as a way in which the sugar company could move into higher value products than sugar.
It is something worth considering, especially given the situation with the West Demerara estates. These estates will have to eventually be closed if they do not diversify out of sugar.
The AFC’s idea of having two small ethanol plants could be a way of saving these estates from closure, and at the same time, ensuring that we have green development in the sugar industry.
If local use can be had for the ethanol produced by these two plants, that would be good for Guyana, since it would save a great many jobs in the sugar industry and also save foreign exchange.
The more ambitious plan to construct a major ethanol facility and having to devote virgin lands for this purpose does not sit right morally, or in terms of how Guyana should be developing agriculture.
The government should therefore not view criticism of the deals made under the Jagdeo presidency as an attack on its development plans.
The PPP need not worry about this. The PPP has rescued this country and brought it back from the brink of economic destruction. In the process it has shown just how hopeless the former PNC government was and why it should never again be given political power in Guyana.
But the PPP has to understand that some of these deals agreed to under the previous government need to be looked at, because there are many things that are not right about them.
The entire hydroelectric deal needs to be reviewed, and reviewed quickly, since investors are not going to wait until we solve all our political problems in the parliament.
And the Trinidadian firm which has signed an MOU with the government needs to be told early that Guyana is looking at other options also.

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