The failure of the Skeldon sugar factory was the result of a mixture of bad policies and unrealistic goals and objectives
Kaieteur News published an article, dated 21st January 2024, in which a reporter asked a question about the Skeldon factory, but the answers provided by VP Jagdeo actually varies considerably with what I understandd to be the actual facts in the matter. So today I will list the reasons why Skeldon failed. The public can decide. Before I do, I want to state again, that in all human economical endeavours there are three principles identified as PPP. i.e. Policy, Practice, Problems. Good policies put into Practice properly will not lead to Problems, but bad
Policies even when put into Practice properly will lead to Problems, and good Policies put into Practice badly will also lead to problems.
1. Skeldon was bad in principle [policy]. Around 2000, Mr. Jagdeo, the then President, residing at Herdmanston House, invited me and my father to meet with him to get our opinion on the Skeldon project, and we told him it was a bad plan. The immanent European withdrawal of sugar’s preferential price was our main concern, and the fact that we had been unable to mechanize the Guyana sugar industry since the 70s without success when other countries like Brazil and Australia were succeeding, made our manual labour industry more and more uncompetitive. It was something he never understood simply because it was an agricultural FACT and had nothing to do with bookkeeping. Jagdeo told us that Geoff Da Silva, then head of Go-Invest, said it was a good plan.
2. There were also bad and unrealistic goals set in the policies of the project, which were in our opinion, tenuous. (A) That it was unreasonable to expect Skeldon could, in less than 5 years, double the size of its cultivation to 20,000 acres. (B) We doubted that the farmers in that area had the equipment and the economic resources necessary to develop an acreage equal to the then Skeldon cultivation of around 10,000 acres in 5 years.
3. Being bad in principle was only the beginning of the problems when they decided to go ahead with it, since it was not only bad policy but was put into practice very badly.
4. In order to establish the additional 10,000 acres needed, and without building one new drainage structure, they released the water from the swampland they intended to expand the cultivation into, and as a result, they flooded the entire existing Skeldon cultivation area for years, making Skeldon, which was up to that time the best performing estate in the industry, into the worst performing in the industry.
5. There was a very huge rift in GuySuCo about who [country] should provide the factory. To his credit, the then Chairman Vic Ouditt, one would believe in consultation with his management team and fellow directors, wanted to buy the factory from the Indian company Walchan Nagar since they had a track record of building 40 new factories successfully of the size contemplated and had upgraded 40 more to that of 300 tonnes per hour capacity. I am very reliably informed that it was Mr. Jagdeo who disagreed and decided to go with the Chinese. It was a very bad choice, the Chinese had no track record in such an enterprise and built a factory which from the very beginning was a literal misfit. Clearly, the parts were bought from different manufacturers [milling, clarification, boiling house etc.,] so putting together the various components, pipes, vessels, foundations etc. were very challenging.
6. The co-generation part of the plan was also very flawed. Co-generation, which required far more highpressure boilers than those currently in use here, were improperly operated and they kept exploding; efficient co-generation also depends on the supply of bagasse from the crushed cane. This factory never achieved the throughput of 300 tonnes per hour and used heavy fuel to do co-generation of power instead of the free crushed cane as fuel. Also, the electrical structure of the entire East Berbice region was structured for the power to come from the West to East but by making Skeldon the provider of the power, the entire system was rebuilt at a substantial cost. Most reports don’t consider these costs which were paid for by GPL.
7. Booker Tate, who President Hoyte contracted to manage the industry in 1989 was not the same entity which was assisting to execute the Skeldon project. Sometime between 1988 to 2005, the consultancy changed hands when Tate sold it to a South African company which was not very au fait with this country’s field challenges. As usual GoG was asleep at the wheel and did nothing until it was too late. The new people were totally lost in our heavy rainfall, below sea level and heavy clay soils. They also wanted to introduce an experimental type of juice extraction process using a diffuser and not compression by mills. The simple fact was that South Africa was only just experimenting with this type of extraction i.e. leaching the juice out of the cane rather than crushing it out, as was worldwide practice. More than anything else, this was the biggest problem that the factory had and it never worked. On the GuySuCo board I sat on in 2016 under the APNU, there were several former GuySuCo managers and directors who understood the industry, the PPP didn’t like that kind of Board. The one I sat on in 2021 had one former Human Resource Director of the Corp… everyone else knew nothing about the sugar industry and many were in conflict of interest positions. One can only view this with grave suspicion.
8. Also, this factory was highly automated, and Guyana had no technician who could operate such a factory, especially when it was built by people who were buying parts from different manufacturers, so in time all the automations were removed or bypassed to allow a more manual type of operation.
9. I’m not even going to dwell on the fact that these people brought a factory here which did not have a filter to remove the mud from the juice, and were simply sending the mud back to the experimental diffuser which already had major challenges; finally, to resolve this issue they took out the Oliver filter press from the old factory and installed it in the new factory.
10. The field problems were no less challenging and were never addressed to establish a proper machine friendly field layout and ended up with a nonsensical layout as a compromise which never worked. All of the mistakes from Skeldon and the East Demerara Estates are still being executed by the same people who caused this problem in the first place but who are now expecting a different result!
11. The end result was that the Estate never achieved its objective to have 20,000 acres, it certainly was never able to supply that huge factory with cane to keep it grinding continuously which was essential to it’s success, and the farmers never came close to expanding to 10,000 acres and this led to even more inefficiencies since you cannot input 150 tonnes of cane per hour through a system designed to process 300 tonnes per hour!
This government learnt nothing from Skeldon, instead they borrowed money from the European tranches of cash which was supposed to make our industry more competitive and used it to complete the Skeldon project thereby depriving the rest of the sugar industry of money to make it more competitive. In the face of the withdrawal of the preferential price, the failure to mechanize, and faced with a dwindling and expensive local labour force, compared to those sugar growers which had mechanized effectively, endangered the entire industry making it uncompetitive. It’s not unreasonable to state that the Skeldon project, in time, destroyed the rest of the sugar industry in Guyana, which was the domino effect.
Recently, I saw misleading information in the media on the industry moving full speed ahead with layouts for mechanization. Editor, they are doing exactly what they did at the East Demerara Estates and Skeldon, which produced such poor yields that with cries of “no cane in the fields” both entities were closed. As the then Executive President of Guyana who piloted this disaster through all its phases, I don’t see how Mr. Jagdeo can escape responsibility.