The administration has pumped significant subsidies into the bauxite industry to safeguard the jobs of many, President Bharrat Jagdeo argued yesterday.
The president told the media during a briefing at the Office of the President that the previous administration was on the verge of closing the industry when the government took over in 1992.
He was asked to respond to a question relating to testimony by Cabinet Secretary, Dr Roger Luncheon in court this week, in which he (Luncheon) said that there were no moves on the part of the administration to make any capital investment in the bauxite industry, as was done with the sugar industry, because bauxite was unprofitable and a pact with the International Monetary Fund (IMF) precluded any such investment.
The president said yesterday that the previous government had brought in an Australian group, Minproc to retrench and shut down the industry. At the time, he noted, GuySuCo, “through the sugar levy was producing… maybe at least 20 percent of the government revenue came from the sugar industry”.
He said that if one examines the entities which were not privatized under the PPP, one would observe that shipping, the Guyana Oil Com-pany (GuyOil), GuySuCo are major net contributors to the national treasury. He said that in the past two years the position has changed.
The president stated that huge subsidies had to be pumped into the bauxite industry and “the IMF had a policy against subsidies so what we did, we could have shut it (bauxite industry) down …we said no and we from time to time said if we privatize then we would take back the industry”.
He stated that the government later privatized the industry with the advent of Russian bauxite company Rusal, adding that, “we kept it alive just to keep the jobs alive in these areas”. And he noted that the communities in the Region 10 area are benefitting from initiatives made by the government.
He said that power is provided to the communities at Linden and Kwakwani at significantly lower cost than other parts of the country. He said, “every year we spend two billion dollars to subsidize electricity in Linden… people in Linden pay less than one tenth of what people in the rest of the country pay for electricity”.
He said Linden and Kwakwani receive electricity based on an “overhang” from the bauxite days, adding that it was the policy of the IMF at the time where subsidies are concerned.
Luncheon was asked to respond to questions during re-examination by Attorney Anil Nandlall as the $10M libel suit filed by President Jagdeo against Kaieteur News and columnist Freddie Kissoon continued in the High Court on Monday.
He said that central to government’s economic recovery policies, was an IMF programme and “the principal product of the Government of Guyana/IMF agreement was that recovery”.
He said that privatization of the industry was successful and it acquired investment which exceeded the US$180M that was allotted for the Skeldon Moderniza-tion Project.