The Guyana Sugar Corpora-tion (GuySuCo) will meet with the National Assembly’s Economic Ser-vices Commit-tee once again in October, when the state-owned entity will have to answer to how consistently it has met the indicators set by the European Union (EU) for funding and how the money was used.
While GuySuCo prepares for the meeting, the opposition parties are putting forth what they hope to see revealed during a thorough overview of the current sugar industry and practices.
Carl Greenidge, APNU’s Shadow Finance Minister, told Stabroek News that the main opposition “is aware of the challenges facing GuySuCo and has already called on the gov
ernment to address them.”
He pointed to APNU’s call for the government to explain how the funds transferred to GuySuCo had been used. “Adequate explanations have yet to be provided and the matter is to be taken up at the level of the Economic Services Committee,” he, however, noted, while adding that in June and July of this year, when APNU executives met with the president, the issues were once again raised but no answers have since been provided.
Greenidge also said that in response to a request from the Committee, GuySuCo had submitted a 2013 to 2017 plan but he pointed out that he could not be definitive about its status with regards board approval. “…It appears to be still in draft at this stage,” he said.
According to Greenidge, GuySuCo has an obligation to invest in a strategic plan that is far more inclusive than its predecessor due to the severe condition of the industry. He said that the plan should incorporate all the performance criteria the company is expected to meet, whether they are internal or a requirement of international assistance and he said the parliamentary committee is primed to interrogate management on these very serious issues and about possible interventions.
Greenidge admitted that the opposition was not privy to the EU’s mandatory indicators but said that performance indicators had to be wider and inclusive of management and financial gauges. “The company ought to be able to say how funds received have been spent. They would have to do so if the EU requires it. Publicising such information is consistent with best management practice, helps the company to motivate employees and management and of course enables the public to monitor its performance,” he said.
He further noted that the challenge arises from the poor oversight of the companies which are allowed to use budgetary support how and where they like, as though it is general revenue. “Its use should be targeted and purposeful allocation to support a defined and measurable improvement in a named and known cost centre,” he argued, while saying that GuySuCo’s responses would be very interesting to hear and that “material provided so far on performance seems to be concerned almost exclusively with technical indicators. In this latter regard, all I recall receiving are capital expenditure targets.”
Turning to GuySuCo’s crippling financial situation, Greenidge said the government was aware since the EU Green paper of 1996 that the EU market for our sugar would not remain protected for much longer. “The government did little to equip the industry to meet this challenge…we are paying the price for this lack of foresight now that the industry is admitting that is a real prospect of not meeting its EU obligations. The government will have to gear itself to deal with the risk of future loss of the market,” he warned.
He said that GuySuCo’s financial woes stem from obvious reasons, including “sweetheart deals” at the expense of the company. “The fiasco over the new Skeldon sugar factory is a case in point. A contract that should have given us an efficient factory has left us with a white elephant,” he said, while adding that because of these dubious contracts, the taxpayer is continuously left with the burden of providing subsidies to a sector that is incapable of meeting its requirements. He further charged that corruption and incompetence have also added to the costs.
Greenidge elaborated that for the original Chinese contractor, China National Technical Import and Export Corporation (CNTIC), to not have a performance bond to ensure any remedial work needed to be done on the Skeldon factory would be undertaken at the contractor’s expense was “unbelievable.”
He said that the recently revealed figure of US$30 million paid to Bosch Engineer-ing for rehabilitation at the Skeldon factory was “an unacceptable additional cost to have to bear, 15% of the contracted cost and it is to be borne by the taxpayer.”
Khemraj Ramjattan, head of the AFC, stated that the original Skeldon deal was “riddled with mismanagement and it ought to have been supervised by a professional core before being entered into.”
Ramjattan also said that both Indian and Brazil had far more success in the construction of sugar factories, but instead the Bharat Jagdeo administration pushed the deal forward. “…It was a deal that was directly being organised and managed by the former president and that’s why we have to go back to the Economic Services Commit-tee [and] talk about this deal,” Ramjattan told Stabroek News.
Like Greenidge, he believ-es that contracts awarded were sketchy. Ramjattan said that “the management suffocates its professionalism when so much politicisation is emanating from the big boss at Freedom House, GAWU [Guyana Agricultural and General Workers Union] and OP [Office of the President] and that is what is going to kill this industry.” He noted that Surendra Engineering used to be the sole distributor of sugar factory spare parts for GuySuCo but after deficiency after deficiency, management was finally able to convince the board and the government to stop using it as sole distributor. He said that it was “because we have political loyalists up there that led to Surendra Engineering being the company. Contracts were being given too because of political engineering and most of the parts were defective. GuySuCo had to fight long and hard to blacklist Surendra because that is the sole business. Management was telling the board and the government that these spare parts are no good.”
Stabroek News reached out to Surendra Engineering for a comment on Ramjattan’s statement but was unable to make contact.
Ramjattan said that from the inception GuySuCo was proving to be financially ignorant in the construction of Skeldon and that EU funding needed better monitoring. Ramjattan said that “a major portion of EU monies went to balance of payments and a whole host of other matters to do with non-sugar issues.”
He said that the GuySuCo’s inability to show fiscal responsibility was apparent when the EU funding was used to pay off internal debts repeatedly.
The leader of the AFC said that the government and GuySuCo had to own up to how and where EU funding has gone throughout the years.
Previously, GAWU president Komal Chand called on the EU, the government and GuySuCo to breakdown how much money was actually turned over to the sugar sector and percolated down. The EU Ambassador Robert Kopecky responded stating that the EU has been responsible for $31.1 billion since 2006 while agreeing with Chand that new ways of doing business were necessary to further the sugar sector and encourage a turnaround of the industry. Kopecky did acknowledge that the various indicators have not been expanded upon but that the government was essentially responsible for this being public knowledge. He did, however, reveal that “crucial investments in factories, drainage works, mechanisation and capital investment, among others, allowing improved levels of production even during adverse meteorological conditions,” would be vital broad based indicators that had to be met for the €23.4M to be handed over and disbursed in 2013.