Skeldon was the right investment decision at the time

Nov 21, 2016 Letters

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Dear Editor;
GUYSUCO and APNU+AFC are preparing the grounds to break the bad news – 2016 dismal production, the worst since 1990. In APNU+AFC’s first full year in sugar, they have to quickly find a scapegoat for the catastrophic production and justify their plan to close sugar or to close some parts and privatize other parts. Wales and LBI are already due for closure this year and other closures are expected in 2017, ethanol production at Albion either is on hold or discarded and, it appears, Skeldon is to be privatized. Last week Raphael Trotman blamed former President and Opposition Leader Bharat Jagdeo and former President Ramotar for Skeldon’s and GUYSUCO’s woes.
He deemed Jagdeo and Ramotar “bad workers who blame their tools”, oblivious that every day, APNU+AFC, from the President down, offers one excuse after another for their failure, blaming everyone but themselves. Jagdeo and Ramotar, far from blaming Booker Tate, tried to remedy the problems and overcome the challenges. They recognized sugar was facing major challenges like climate change, need for mechanization, expansion, modernization and diversification. They knew specifically Skeldon suffered from a design flaw, both in the construction of the new factory and in the land conversion for mechanization and expansion. They recognized the experts had not made proper adjustments for drainage and irrigation for expanded cultivation. This was trying to find solutions, not finding scapegoats.
They rightfully tried to get Booker Tate which was the contractor responsible for factory design and completing land conversion to take corrective action. When Booker Tate failed to take necessary corrective action, GUYSUCO sued Booker Tate. That was not unjustified blaming; it was holding Booker Tate accountable. They were paid, they needed to deliver. Skeldon was not the wrong decision; Booker Tate made mistakes in the designs, some of which were reckless. Trotman, Professor Thomas and others must explain why GUYSUCO has not continued the legal action against Booker Tate. Has it anything to do with the fact that Booker Tate’s representative on the Board was Errol Hanoman who is now the APNU+AFC appointed CEO?
With the arbitrary ending of the 1976 Sugar Protocol by the EU, abandoning guaranteed quota and the announcement of immediate price cuts for sugar, industries in ACP had to make adjustment for a post-EU Sugar Protocol existence. For some sugar industries it meant immediate closure. For others it meant investments for a more competitive market. Guyana accepted that reality and after expert advice, GUYSUCO devised a plan to re-engineer its business to include expansion and modernization of Skeldon, including a new factory. It also included greater diversification and value-added products and co-generation for sugar throughout the industry.
There were a number of factors that determined that Skeldon was the best choice for expansion and modernization. There was field capacity for cultivation expansion, a cadre of large scale private farmers, labour availability, appropriate weather, navigation for cane transport, ideal for mechanized field operation, among others. These factors led to the recommendation that Skeldon expansion and modernization should represent the anchor in the re-engineering of Guyana’s sugar industry. The PPP accepted the recommendation and made the $US110M investment.
GUYSUCO went to public tender and Booker Tate won the contract for the overall project management and design of the estate and factory and the work for land conversion and drainage and irrigation. The Chinese won the contract for factory construction. The whole project was a turnkey operation. Booker Tate chose a design based on the Komati Sugar factory, South Africa, with a capacity of 350 tons/hour, producing sugar at 10 cents/pound. At the time Errol Hanoman and Roger Speedy were Booker Tate representatives on GUYSUCO Board.
During construction, problems were identified and Booker Tate’s representatives stated that since the project was a turnkey operation, GUYSUCO should wait until the project was completed, that the contractor, Booker Tate, would ensure flaws were remedied. This never happened. After more than two years the Skeldon factory was far from the designed capacity of 350 tons/hour and production cost of 10 cents/pound.  Turned out that Booker Tate’s design was not to Komati’s specifications, field conversion was poorly implemented and drainage and irrigation did not meet the needs of expanded cultivation. Hence the resort to legal action by GUYSUCO.
GUYSUCO, supported by the PPP proceeded to make rectification to bring Skeldon to specification. After several years and much resources, there are still inputs to be made. But by the end of 2014 and with a lengthy period of appropriate weather, Skeldon began to perform better. It had an outstanding year in 2015. GUYSUCO’s Chairman, its CEO and APNU+AFC took credit for Skeldon’s “turnaround”. Now less than one year later, they claim Skeldon is falling apart because of the PPP. Faced with a dismal 2016, they are in a desperate, full-throated blame mode.
The PPP was and is not blaming Booker Tate; it is holding them accountable. That GUYSUCO, under instruction of APNU+AFC, is not pursuing accountability by Booker Tate is irresponsible and since Hanoman is now the CEO, it raises serious conflict of interest concerns. Skeldon was the right investment decision to ensure sugar stays as a mainstay of Guyana’s economy into another century.
That sugar has encountered problems with performance at Skeldon and across the industry has more to do with a complex set of circumstances, including design problems with Skeldon, climate change, intense investments for mechanization and the unfair international trade and pricing regime. But the potential for sugar’s glory is still undiminished.
Dr. Leslie Ramsammy

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