November 6,2016  Source

Dear Editor,

These notes are taken from the National Development Strategy which we have mostly forgotten and disregarded as obsolete. However, it is not obsolete, since whilst a few numbers and situations have evolved because of the non-implementation of the strategy, the concepts contained therein are still very valid.  We should update it and as in the case of the original, the private sector should do it.

There are things regarding sugar which are contained in the pages of the strategy which should remind us of sugar’s importance to us in the past.  For example the strategy tells us that the sugar levy which was put into effect in 1975-76, was still being paid by the industry as late as 1996 when US$51 per ton sugar produced by GuySuCo was to be paid. If one used that low figure and the twenty years from 1975 to 1996, and we use a very low average annual production of 230,000 tons for all of those years, the industry would have paid to the Government of Guyana US$234.6 million or G$47 billion. Then there is the local subsidy of sugar; Guyana was selling sugar to its local consumers at a price which was lower than the cost of production. For example, the local sugar subsidy in 1997, according to John Gafar, was $250 million for that year and that had been going on since independence.  In addition since 2006 the EU’s developmental funds began to flow to this country, and are now somewhere close to €250-300 million, which in 2011 was 1.4 to 1 US or 280-1 G = $84 billion of which GuySuCo saw nothing.

It was used, among other things, to spend $800 million to divert the Georgetown sewerage system to build a Marriott Hotel, to spend a similar amount to change the Plaisance GBC short wave radio transmitting installation into Pradoville 2, on a very underutilized and expensive stadium, as well as a road to Amaila, and a telecommunications cable from Brazil. The last two projects are now considered national disasters. There was also the hopeless canal and other similar uneconomic activities, but the money was never given to the industry to which the EU expected the funds to flow, to “position it to be better equipped to cope with the loss of the preferential EU price, including diversification and mechanization.” The levy, the subsidy of the local selling price for sugar and the EU developmental funds which contributed to the economy of Guyana are more than all the billons of dollars given to the industry in bailout money thus far, and which we are so wont to criticize now.

Nowhere in the strategy, does it say that there is any evidence that any of the levy and local subsidy money was ploughed back into the industry to make it more competitive; in fact the strategy tells us the opposite, that many major GuySuCo capital projects of factory and field were abandoned because there was no money. Whilst the sugar business in Guyana was getting more difficult to operate, due to the competition from beet and other cane producing countries which had mechanized, and it was also weighed down by a massive local levy, a subsidy of the local selling price, and direct taxation, most of this money over several decades was used to bolster the failing economy of Guyana in general and none was given to the sugar industry. And quite incredibly some of us still want to know how GuySuCo finds itself in this situation today!

We were living here and we remember that we had to line up for cooking oil and gasoline and faced empty grocery stores. I am going to leave the acts of sabotage, unnecessary striking and arson of cane against this industry as it continued to be a political football which even today is evident everywhere. The workers are well advised to examine the agenda of people who are telling them that the way forward is to disrupt GuySuCo’s activities more, and all will be well; that there is profit in disruption.

There is now no question that GuySuCo has to diversify, especially its non-profitable parts to some other more productive farming activities. But it takes money to diversify, and the government has to make a choice: they have to understand that diversification cannot proceed without massive investment, and by not diversifying now it is sentencing itself to more decades of bailing GuySuCo out of the deadly downward economic spiral in which it finds itself.

Recently Mr Jagdeo said that he will shoulder the blame for the downward spiral of sugar, and we are on record in opposition as saying that there is neglect of the industry and it will come home to roost in time. The strategy predicted it, and we, in opposition at the time, predicted it; so now it has happened in accordance with the famous words of Winston Churchill, “owing to past neglect, in the face of the plainest warnings, we have entered upon a period of danger. The era of procrastination, of half measures, of soothing and baffling expedience of delays, is coming to its close. In its place we are entering a period of consequences.”

It is good to have this responsibility sorted out by Mr Jagdeo saying that his government is responsible for the woes of the sugar industry today, but now we must face reality. The sugar workers are our people and sugar has carried us too long as an industry to abandon them now; we have to see what we can do to help them to make the changes to profitability through whatever means we can. As of today’s date the full amount of money we have bailed out GuySuCo with cannot be equated or calculated with what sugar has given to us over centuries, and we must never forget the foreign exchange which sugar earns per annum for this country. All of the pundits who say abandon it, can’t possibly be serious, the loss of the foreign exchange alone from our sugar would ruin Guyana even now.

Since we started growing sugar here in the seventeenth century, it brought all of us here excepting the indigenous peoples. Everything we are as a nation today is due mainly to the sugar industry. But it has to be replaced by something else which will be profitable for our people in the future, or these arguments will not be legitimate. There is no legitimate projection of GuySuCo’s future as a sugar industry, which I have seen, that sees it as becoming profitable at any time.

Finally, Editor, I have to make one observation which I offer in good faith: nowhere have I seen that with our new found potential wealth as an oil producing nation, we have indeed realized that we are now a country with a great asset and it is self-evident that we should begin to employ that asset now and negotiate loans for projects which we have always wanted ‒ hydropower, a deep-water harbour and the road to Brazil. Our having this massive oil potential is not going to reduce our need to develop hydropower. Venezuela, even though it was the 4th biggest exporter of oil a few years ago, generates 67% of its domestic power from hydro not oil. Once you have the potential you use it, and we have that potential; from the dawn of time it was always there. If we resolve our power problems it would immediately improve our economic situation and make Guyana realize its potential. Over and over I keep hearing that Guyana is the bread basket of the Caribbean; that is frankly debatable due to the rising ocean levels and the dangers it poses to our coast, but hydropower will guarantee that with cheap electricity, industries and manufacturing will come quickly. The five countries that account for more than half of the world’s hydropower production are Brazil, Canada, China, Russia and the US. These five countries contain three superpowers ‒ the US, Russia and China.

Experts acknowledge the striking correlation between hydropower development and a country’s economic development. Norway, one of Europe’s poorer countries a century ago, is today a highly industrialized, self-reliant and wealthy nation. Nearly 99% of Norway’s electricity supply comes from the electricity generated by its hydropower plants, which have a total capacity of 27,000 MW. We must start now to negotiate our way forward now that we have the assets to be able to pay for it. When Guyana makes a hydropower plant and supplies Manaus and the state of Amazonas and Roraima in Brazil with power and a road to the Atlantic, then we will be a very powerful nation.

There are currently more than 30 power transmission linkages between the United States and Canada. During 2014, 60 companies in Canada exported 58.4 terawatthours (TWh) of electricity into the United States, making up 1.6% of US electricity retail sales and 10% of Canadian electricity generation. The largest exporters were Hydro-Québec (16.4 TWh) and the Manitoba Hydro-Electric Board (8.6 TWh). New England and New York accounted for 60% of the total electricity imported into the United States in 2014. We have to wake up; we have everything we need; all we are lacking is the vision to use it. Our total current generation is 100-120 megawatts, and our government has calculated that the upper Marzaruni river alone contains the potential to produce 4.5 megawatts of electricity. All of this has made Canada a very wealthy country, its big business this exportation of power. What’s wrong with us?

Yours faithfully,

Tony Vieira