With the recommissioning of the Rose Hall Estate being the priority at the moment, Minister of Agriculture, Zulfikar Mustapha has given the assurance that the problematic Skeldon Estate will be reopened with the idea of sugar production being done on a smaller scale.
In its manifesto for the 2020 general elections. The PPP/C vowed to reopen three of the four estates shuttered by the APNU+AFC government – East Demerara, Rose Hall and Skeldon. It also announced a development plan for the former Wales estate where the factory had already been dismantled.
The Rose Hall Estate is expected to be recommissioned at the end of the month.
Mustapha recently told the Sunday Stabroek that following the recommissioning of the Rose Hall Estate which he stressed is a priority at the moment, more aggressive works will be carried out to reopen the Skeldon Estate which will see a phased approach.
Vice President, Bharrat Jagdeo while on a recent visit to Berbice said that people have been rehired at the Skeldon Estate. “Here in this region, we’re going to reopen the Rose Hall Estate from the next crop, we’ve rehired almost all 2,000 people there. We have started rehiring; we’ve rehired maybe about 30% of the people at Skeldon.”
Asked about this, Mustapha said that people have been rehired to start looking at things around the factory and to “get things in order” for the reopening at that estate.
According to Mustapha, sugar production will be done on a smaller scale “than before.”
Further, Mustapha explained, that they are also looking at several other avenues to generate revenue pointing out that they are looking at ways in which they can work with farmers given that there are 30,000 acres of land to be developed at the location.
In the future, he stated that Region Six is earmarked for hemp and plant production stressing that they are looking at “new activities that can bring a lot of money.”
With the infrastructure at the Guyana Sugar Corporation’s (GuySuCo) Skeldon estate left to deteriorate under the APNU+AFC government following its closure in 2017, Jagdeo in April last year had said that it would require billions to be invested to rehabilitate the existing infrastructure before hinting at a smaller scale of production then.
However, at his recent Tain outreach in Berbice, Jagdeo also noted, that they are now expanding into hemp production and aquaculture at Skeldon, “a whole range of industries to generate more jobs.”
The Skeldon Sugar Modernisation Programme was one of the major disasters of the last Jagdeo administration.
The Skeldon factory, built over several years by the Chinese company CNTIC and commissioned in 2009 at a cost of around US$187m turned out to be the largest failed public sector project in the country’s history. It led Jagdeo to warn in October, 2010 that if the factory failed then “sugar was dead”. He vowed to take a hands-on approach. “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.”
Unfortunately, his interventions were to no avail and the Skeldon factory drained GuySuCo of money. The factory’s annual projected output of 116,000 tonnes of sugar was never met despite costly remedial interventions by a South African firm. Its highest annual output of 39,153 tonnes was achieved in 2015.
It got nowhere near to its intended grinding figure of 350 tonnes of cane per hour and the situation persisted all through the succeeding Ramotar administration and the first two years of the Granger administration until the factory was shut at the end of 2017 preparatory to divestment/privatisation.
The Skeldon factory also had a high cost of production of sugar – around US 40 cents per pound – far higher than world market prices at a time when Guyana has lost access to preferentially priced markets.
The Commission of Inquiry (CoI) into the sugar industry that had been convened by the Granger administration in 2015 reported the following: “From the commencement of the Skeldon project in 2005, when GuySuCo had to initially contribute US$25m from its EU (European Union) receivables over a period of (18) months commencing in 2005, the corporation’s liquidity declined rapidly. As a consequence, GuySuCo became heavily dependent on bank overdrafts, and extended credit periods to maintain the operations of the business. This was the start of the decline of GuySuCo’s financial position leading to its present state of insolvency”.
The CoI said that GuySuCo’s expenditure on the Skeldon factory to the tune of US$72m, the slide in the EU price and the drop in sugar production resulted in reliance on expensive overdrafts for working capital, delays in meeting creditor’s payments resulting in creditors refusing to supply or demanding payments in advance, minimal capital expenditure on the business, late purchasing of critical inputs leading to late fertilising and application of chemicals, significant loss of revenues and dependency on the Government for bailouts. Furthermore, the report said that US$7m had to be spent on corrective work on the factory. This financial impact had a debilitating effect as essential work could not be done on the other sugar estates, the report found.
