Jagdeo bypassed experienced Indian firm for Chinese

Apr 07, 2015 News

– pays extra US$30M to build Skeldon factory
Former President Bharrat Jagdeo, looking for a contractor to build a modern, state-of-the-art sugar factory

Bharrat Jagdeo

at Skeldon in the 2000s, made a strange move. He chose an inexperienced Chinese contractor that had no history of building such a sugar factory over an internationally recognized Indian firm.
The government had announced that two tenders were received for the Skeldon sugar factory- one from Walchandnagar Industries Limited (WIL), of India, and the other, China National Technical Import and Export Corporation (CNTIC) – which was known more for importing vehicles into China.
The decision to go the way of CNTIC was taken by Jagdeo.
The Indian company’s bid came in US$30M cheaper than that of the Chinese firm. The Chinese exceeded the construction deadline by almost three years, completing the project in 2009.
The project cost, under the Chinese firm, escalated from US$112M to over US$200M.
The monies to finance the entire project including the factory and field expansion, under the direction of Jagdeo, came from the World Bank- US$56M; Export/Import of China- US$32M and US$25 from the Caribbean Development Bank.
But even then the factory was not working as it should.
Government accepted the malfunctioning Skeldon factory in August 2009.
Months later Jagdeo gave the same Chinese company another major contract. This time it was the US$40M-plus to install the new transmission power lines along the coast.

Board Member: President Donald Ramotar

These power lines stretch from Parika, in Essequibo to Moleson Creek on the Corentyne.
The Indian company has constructed more than 80 turn-key sugar factories and has modernized more than 100 facilities to boost efficiency and production capacity. It had a proven track record in the diffuser technology, similar to what the current factory has.
The Chinese firm had virtually no experience in building sugar factories. That company had to purchase components from all over the world, including Louisiana, US, to construct the factory.
He has since been taking significant flak for his role in the growing scandal which refuses to go away.
To date, no one has been held responsible for the failures. Sitting on GuySuCo’s Board of Directors at the time was current President Donald Ramotar.
In the 90s, Government recognizing that GuySuCo was producing excess sugar, came up with Skeldon modernization project, including a new factory, and expanded fields, to target the CARICOM markets. It was a good idea with plans for a sugar refinery as well.
Guyana and GuySuCo plugged more than US$70M.
Skeldon, despite its newness, has been recording the worst performance of all the older factories in Demerara and Berbice, the cane growing areas of Guyana.
Its efficiency, or lack of, saw the factory requiring more than double the industry’s average of canes to

Dr. Raj Singh,
CEO of GuySuCo

produce one tonne of sugar last year.
GuySuCo, at this stage, has been forced to hire at significant costs, several experts, including Indians and South Africans to correct the deficiencies of the factory.
The issue of sugar is a serious one for political parties contesting the elections. None of them wants to touch it, except to promise the 16,000-plus workers that the industry will remain alive despite other CARICOM countries abandoning production.