President Bharrat Jagdeo has warned that if his government’s much-vaunted US$200M Skeldon sugar factory doesn’t succeed …”well the sugar industry is dead”.
It was the starkest warning yet by the Head of State on the Chinese-built factory which has lurched from one crisis to the next and is not working anywhere near to capacity.
Jagdeo was speaking at the commissioning of the Guyana Water Inc. $1.4 billion water treatment plant in Corriverton, Berbice on Thursday. He lamented that the Skeldon Factory was not delivering the expected results and as a result the sugar industry is in trouble.
“This is a US$200 million facility… unfortunately, it’s not delivering the results we expected it to,” Jagdeo said. “They have too many mistakes going on there and I intend to fix it…it has to change,” he said. “We’re not going to make that sort of investment to have a few people mess it up,” he stated. “So even if it means personally I have to get involved, I will get involved to ensure that it is fixed…that it’s delivering the kind of results that it should deliver so that we can safeguard the sugar industry,” he stated.
“If that doesn’t work well, because the European Union cut our sugar prices by 36 percent… if that doesn’t work well the sugar industry is dead,” he stressed. “It’s dead. It’s as simple as that because the bulk of sugar will be produced in the Berbice area,” the President said, noting that the government had hoped that the sugar would have been produced at a lower cost so that the average cost would have allowed them to “to break even at least at the world market level.”
The sugar corporation has been reeling from heavy financial losses and low production. The President’s remarks came after Aa report in Thursday’s edition of Stabroek News that sugar production was far behind target.
The President noted that several countries in the region had downscaled their sugar industries and he said that this was because they lacked the commitment. Jagdeo stressed that his government is committed to the industry and noted that sugar is the basis of much of the economic activity in the Corentyne.
“If sugar is not growing in this Corentyne, this place would be a ghost town…sugar not only pays the sugar workers but the shop keepers and everyone else- the market vendors and every single person here,” he said. “It’s the largest economic activity in this area. And if you change that income…this place becomes very, very vulnerable and I’m not going to let that happen because of a few people. So whatever it takes we’re going to make it work, we’re going to make it work,” Jagdeo said.
The government decision to invest heavily in the sugar industry had been queried in various circles. The investment came just before Guyana’s main and lucrative market in the European Union came under threat from a series of drastic reforms which saw the unilateral termination of Sugar Protocol which Guyana and other Caribbean countries had believed was permanent even within the ambit of the formation of the World Trade Organisation.
Earlier this week, Chief Executive Officer of GuySuCo, Paul Bhim told Stabroek News that the sugar industry is facing a heavy production deficit saying that it has slumped to “some low levels”. He countered by saying that he expects things to “pick up soon”.
While declining to release any production numbers, sources within the industry said the deficit is high as 30,000 tonnes. Second crop numbers were reportedly some 61,000 tonnes as of last week; production averages around 8,000 tonnes weekly. A production target of 280,000 tonnes has been set for this year, but the industry recorded a shortfall during the first crop with output being recorded at 81,864 tonnes.
“It is true that we are behind, yes it could be close to that number, but the weather has severely impacted on our operations”, the CEO told Stabroek News.
He said the industry has been struggling since the start of the first crop and is constantly facing setbacks, but insisted that the current dry weather means better results.
GuySuCo, he said, could easily “catch up” with its production provided the weather holds because there is an adequate supply of cane in the ground.
Meanwhile, General Secretary of the Guyana Agricultural and General Worker’s Union (GAWU), Seepaul Narine said that GuySuCo needs to step things up because the current numbers are not positive indications. “They need to step things up”, he said, noting that while the weather has been a spoiler the industry also has to work harder. He pointed out that the inclement weather has impacted harvesting efforts. Still, he said some of the problems at Skeldon need to be addressed, in addition to efforts being put in across the industry.
In recent times, there have been several glitches at the Skeldon Sugar Factory which have impacted on its operations. Just this week, the factory was operating with one punt dumper. There was no clear indication when the dumper would be functional. Bhim said that the factory was operating satisfactorily inspite of the problem but admitted that less cane was being ground as a result.
The present board of GuySuCo had formulated what it described as a turnaround plan but production and financial results into the second year have been dismal.
The Skeldon factory was built by the Chinese company China National Technology Import and Export Corp. Work began on the factory in 2005 and it was expected that the project would have been completed by October 2007. The commissioning date was pushed back several times until the end of 2008.
The old Skeldon factory was rated at 92 tonnes of cane per hour while the new factory has the capacity to process 350 tonnes per hour.
