Feb 24, 2016 News
THE VOICE OF THE LIBERAL DEMOCRATS
By Sase Singh
As you can see from Part 1 and Part 2 of this Sugar Series a position is being built which clearly explains why privatization of the sugar industry is bad for Guyana. There is no doubt that there is a harsh economic reality in the sugar belt. But such a situation demands rapid systemic and organization changes in how the business is being managed going forward.
However, this situation does not demand wholesale divestment or privatization of the industry.
Intervention Diagnosis & Recommendations Implementation
Monitoring and Evaluation of the Process
The owners of GuySuCo are not broke and thus, a proper restructure is what is critically needed at this point in time and fast; not privatization. Although it was a tough decision, mothballing Wales can only add value to the process to save GuySuCo.
As the accompanying picture illustrates, this situation demands a proper financial diagnosis. This situation demands a collection of sensible and rational financial and operational recommendations. This situation demands a deal between Cabinet (as the executive representatives of the people), the Management and GAWU (workers’ representatives).
This situation demands an updated and realistic Independent Business Review with the output being a Business Plan; something the Parvatan Committee was charged with doing but failed to deliver. Throughout this entire process, monitoring and evaluation have to be done by the Economic Services Committee of the Parliament.
I am grateful that the Granger administration released this Parvatan Committee Report, or else the government might have been hoodwinked by a report that only delivered on a sub-set of the requirements of the Terms of Reference (ToR) but yet charged over $50 million for services rendered.
When the PPP was in power, we would have said such a situation should be classified as executive trickery of the highest order. There is no reason to dispute that it cannot be classified as the same today. How different is this from selling the health sector an average of G$46 million per year in expired drugs under the PPP as highlighted in several of the Auditor General Reports?
Isn’t this CoI Report selling the Granger administration expired data and solutions that cannot stand up to scrutiny? Expired data; expired drugs; same skullduggery; different players; different day.
WHAT DID THIS COMMISSION NOT DO?
• This Parvatan Commission did not model the cost drivers to present an up-to-date and progressive set of financial analyzes that can serve to update the GuySuCo Business Plan.
• They did not present financial forecasts with clear views on the key assumptions.
• They did not provide financial options analyses that offer different scenarios that outline different outcomes if different decisions are taken such as – what if the Skeldon Sugar Factory Debt was absorbed onto the books of the Ministry of Finance and so on.
• They did not even offer a cost/benefits analysis of the recommended operational improvements (what will it cost to implement these recommendations).
• They did not offer alternative balance sheet forecasts with alternative recommendations.
• They did not offer a medium-term cash flow forecast for GuySuCo.
• They did not offer a menu of options on alternative viability options. This decision of wholesale privatization looks very political to me, since the only outcome of wholesale privatization will be the total destruction of the sugar industry.
• In situations like this, investors like Mitt Romney come in with their capital and set up a classic harvesting of the assets and then walk. Privatization will only lead to one thing – total destruction of the sugar belt.
• They did not offer benchmark key performance indicators per estate that they think should be targeted in 2017 and beyond.
• They did not challenge their own key forecast through sensitivity analysis to improve the dataset. They paid no heed to defining and qualifying controllable and uncontrollable sensitivities over a five-year period, much less 2016-2030 as requested by the ToR.
• They did not explore how the strength of the industry can be maximum and the weakness and threats mitigated to make this work.
• They did not offer the decision makers a menu of scenarios so that they can engage in further stakeholder consultations to be able to evaluate the options and define the basis for a final decision.
• They did not offer GuySuCo a fighting chance.
So Guyana is no closer to providing a roadmap in order to deliver a preferred solution for GuySuCo. We may think we are addressing the areas of key concern for the sugar belt by shouting out privatization; but we are only fooling ourselves if we think this is the end of it. The tough discussions have to be had in an environment of national unity between a team of fresh blood representing the state.
GAWU is the elephant in this room and the quicker we engage GAWU, the easier this process will be for all. Until GAWU is in the room, we have to always remind ourselves of the Guyanese proverb – “nah because daag ah play wid yuh, mean he nah bite yuh”.
I think GAWU is committed to saving the sugar belt and will give more to this cause if approached differently. Sugar workers have to accept that 2016 can very well be another wage freeze and that is fine if the end product is saving the sugar belt. But all this senseless talk of divestment and privatization is at best premature and under-researched.
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