Skeldon failure is the government’s failure

As far as admissions go, the one made by Agriculture Minister, Mr Robert Persaud in relation to the Skeldon factory was both breathtaking in scope and rife with repercussions for the industry and his government.

Speaking at the signing of a wage agreement with the sugar union GAWU on August 19, Minister Persaud had this to say: “…the reality is, and to be honest, GuySuCo does not have the competence that it perceives to manage the factory, not even Guyana does not have that expertise, (and) at the end of the day GuySuCo would have to find an arrangement” for the management of the Skeldon factory. He then urged the board of GuySuCo to speed up consideration of proposals by an Indian and a Chinese company for the management of the Skeldon operations.

What perhaps the minister needed to say to be entirely honest about the situation was that the government and its hand-appointed board had completely misconceived and miscalculated the Skeldon project and five years into the project proper it was now confessing to the public that it didn’t have a clue about running it and were now issuing an SOS.

Instead, the minister, as he is wont to do, made it seem as if the corporation was responsible for a sudden loss of the requisite skills needed to manage its ambitious flagship factory and estate.

Truth be told, and there can be no disputing this, the devising of the US$200M Skeldon project and the ill-fated decisions surrounding it such as the hiring of the Chinese company CNTIC to build the factory, are entirely the responsibility of President Jagdeo, Minister Persaud and the long-serving members of the GuySuCo Board such as Mr Donald Ramotar, the PPP/C’s presidential candidate.

The present managers at GuySuCo have had no part to play in the major decisions that have been made about Skeldon and must be bewildered by the public dressing down by Minister Persaud about their abilities.

When this ambitious Skeldon project was conceived by President Jagdeo and others in the government and the ruling party they did not submit their postulations and estimations to an exhaustive review and due diligence by industry experts for the best possible decisions on the type of factory, market assumptions and the supply of cane.

However, they surely must have at least addressed the issue of the factory to be built and whether the technology contained therein was manageable by the expertise available locally. The brain drain and the incessant turnover didn’t begin five or six years ago. It has been chronic for a much longer period.

Whatever the considerations, CNTIC was asked to deliver a turnkey project. Thereafter, management of the factory would become the responsibility of GuySuCo. This much was always clear. Amid the very serious delays and other problems experienced by CNTIC in getting the factory into working order, the government took the decision to dismiss Booker-Tate which had managed the industry to recovery in the 1990s and up to the catastrophic flooding in 2005. It then became the target of the government in relation to the failings of the Chinese company and slumping production and there was an acrimonious parting.

Thereafter, the corporation made its own decisions in relation to the management of the industry. At what stage of this tortuous and lengthy process did Minister Persaud and his government realize that the management expertise needed for this troubled Chinese-built behemoth was not available here? What efforts did it make to secure this expertise and was it satisfied that this could not be provided by Booker-Tate?

The strategic thinking behind the project aside, it is widely believed that the present problems at the Skeldon factory are directly attributable to the Chinese contractor. Yet, there appears to have been no determined effort to have CNTIC penalized for these failings via liquidated damages and to withhold further payments. There has been no clear enumeration from the government on the outstanding obligations of CNTIC to the turnkey stage.

Which brings us to the second dilemma posed by Minister Persaud’s declaration on Skeldon i.e. his urging the board to speed up consideration of the proposals to manage Skeldon. When did the board begin deliberating on a new manager for the Skeldon operations and did it tender for the supply of these services? It would be grossly unacceptable if  the government and board did not intend for management of this facility to be put to tender considering the magnitude and importance of the project. Worse, the prospect that the same contractor could be given the task of managing a facility riddled with problems attributable to it defies logic and belief.

Astoundingly, Minister Persaud on Friday told the media that the proposals from the Indian and Chinese companies to run Skeldon are an “enhancement” of the existing arrangement. By what alchemy has Minister Persaud and his government transformed a turnkey contract for the construction of a factory into one where the company, without tendering, will have a chance to manage it? By what miracle does Minister Persaud expect the public to digest the bitter medicine that the  company which has been so discredited for its construction work on the factory will have a chance to manage it? Or is it the case, that the company will operate the factory for free until the running losses from the factory’s poor output have been recovered? What is the nexus between the Indian company that built the Enmore sugar packaging plant and the Skeldon factory that allows it the privilege of being considered for its management? It is beyond belief what this government and its senior officials are attempting to pull on the public.

What is even more galling to the public is the well-known failing of the government to synchronize the Skeldon project in such a way that when the factory was ready to roll there was adequate cane in the ground to feed its enormous demand. Years after the factory began its halting output of sugar it is still operating far below capacity partly due to the fact that the requisite amount of cane is not in the ground.

As we have said on several occasions the conceptualizing of this project by the government and the GuySuCo board has been shocking, particularly in light of the scale of the investment drawn from local resources and the strategic objective to buttress sugar as a major employer and export earnings accumulator.

The underwhelming results from the factory and its continuing problems are an apt snapshot of the quality of governance from the PPP/C amid the bluster and rhetoric. It has shown itself signally incapable of strategizing on a major project, conceptualizing it, designing, building and executing it. President Jagdeo himself had vowed to get directly involved in sorting out the problems that beset Skeldon but it does not appear that he has lived up to his commitment.

It is unlikely that any tangible changes can be made now in the configuration of the Skeldon factory and the enormous difficulties that face the farmers and workers in that area. It will likely have to be the new government that emerges from elections which takes on board the rationale behind some of the major Skeldon decisions and determines  what radical changes or otherwise are necessary. In the meantime, President Jagdeo and his officials along with the members of the board have much explaining to do.

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