Boondoggle: The Skeldon Sugar Modernization Project

The columns I have written so far on the sugar industry, starting on May 29, 2011 are intended to conclude with a broad appraisal of its prospects and suggestions for the way forward. From this perspective, the importance of the three preliminary considerations examined in last week’s column, cannot be over-emphasized. The Skeldon Sugar Modernization Project (SSMP) provides a stark warning against mis-management.

It has been far too long in the making, given its size and scale, even by the snail-paced standards of agricultural projects in developing countries. It has many of the classic features of a boondoggle or white elephant project. The records show that, as we approach a decade-and-a-half after its commencement, it is still not certain when the project will be fully operational!

Further, readers were alerted last week that the SSMP was intended to be immediately followed by the expansion of Albion and the closure of Rose Hall. Indeed, this extension was scheduled for completion as long as four years ago.

It was also noted that, in retrospect, there was a clear error of judgement on the part of the government in accepting Booker Tate and GuySuCo’s self-serving rationalizations to finance the expansion of sugar output beyond 450,000 tonnes in order to “secure economies of scale,” thereby lowering unit costs of production. With unit costs of producing sugar in Guyana both high and rising, the scale economies, which could potentially be afforded by this expansion, are marginal,....

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