EC funds for sugar action plan
By Chamanlall Naipaul
Guyana Chronicle
March 1, 2007
A FINANCING agreement between the European Commission (EC) and the Guyana Government was yesterday concluded, paving the way for some 5.6M Euros to be injected into the Guyana Sugar Action Plan, designed to buffer the effects of sugar price cuts announced last year by the commission.
The agreement was signed at the Ministry of Finance by Acting Head of the EC Delegation here, Ms. Helena Jenkinson and Finance Minister Dr. Ashni Singh.
According to Jenkinson, the funds are a first contributor to the sugar action plan and the first component of the EC multi-annual adaptation strategy for the period 2006-2013.
She is confident the local sugar industry will meet the challenges ahead.
“The commission is confident that the sugar cane sector in Guyana will meet the challenges of international competitiveness and profitability; that GUYSUCO (Guyana Sugar Corporation) will succeed in ascending the value added chain leaving more employment and money in this country instead of exporting them to the benefit of other, perhaps better off countries. This, of course, will be of general benefit to the people of Guyana,” she said.
She noted too that Guyana is one of the most advanced of the 18 Sugar Protocol countries in its programming for the future of the sugar sector, and is certainly the best in this region.
The envoy indicated that in accordance with GUYSUCO’s prioritised investment plan, the 2006 funding will contribute to upgrading the Enmore factory and installing a packaging plant there, as both investments aim at helping the company realise its strategy of value added and customer oriented products.
The funding will also finance a study of the social impact of the sugar action plan which will guide activities in the social sector following Annual Action Plans for the period 2007-2013, Jenkinson said,
During this seven-year period the overall adaptation strategy will be supported and will include enhancing competitiveness and profitability of the sugar industry, agricultural diversification and measures to cushion the social impact of the action plan.
However, up to the medium-term, 2010, the focus will be specifically on the sugar industry and on the possible social impact of the restructuring reforms, Jenkinson said, adding that there will be a mid-term review which may lead to a revision of the national policy, of the EC response strategy and of the financial envelope.
“So, this EU (European Union) aid is not set in stone but rather, after 2010 it can be adapted to changing circumstances and needs.”
She added that the allocation of the EU is guided by instruments such as the Paris Declaration on Aid Effectiveness and the European Consensus on Development, both of which advocate a reduction in transaction costs entailed in development cooperation and broadening leadership and ownership by governments in decision making.
Jenkinson explained that the EU assistance for 2006 will be delivered by direct untargeted sector budget support, and this entails the release of two tranches of support. One is fixed which depends on meeting already established macro-economic criteria with the following indicators: stability oriented macro-economic policies are being implemented; satisfactory progress in the implementation of a credible and pertinent reform to improve financial management; and satisfactory progress with the implementation of the National Action Plan.
The other is a variable tranche which is released upon the achievement of specific performance indicators which have been spelt out in the agreement.
Jenkinson added that the delivery mechanism gives the government greater ownership and responsibility for the achievement of its policy objectives.
Agriculture Minister, Mr. Robert Persaud recalled that the government began preparations early in anticipation of the reduced price for sugar which will cost the industry billions of dollars annually.
“The government has been preparing the sugar industry for this eventuality nearly a decade ago. The major elements of our preparations are: a new state of the art factory and co-generation plant at Skeldon in Berbice and by improving productivity throughout its operations, diversifying, adding value through branded sugars, such as the Demerara Gold brand, and expanding its markets in CARICOM and further afield, and alcohol production refined sugar and ethanol.”
Persaud added that the government is investing some US$169M in the Skeldon project which is scheduled to be up and running during the first quarter of 2008.
On a national basis, the minister said GUYSUCO plans to spend US$51M on upgrading factories to ensure their reliability in the future, and this year alone some $11.6 billion will be spent on capital investment across the entire industry.
“Importantly, today’s signing is a signal of our firm commitment to the survival of the Demerara sugar estates and the long term viability of the sugar industry,” Persaud stressed.
Acknowledging that the current allocation will be invested to upgrade the factory process at Enmore, he said this will be a precursor to the construction of a packaging plant and warehouse contained in the National Action Plan approved by the EC.
Singh, reiterating the importance of the sugar industry to Guyana, said it can be considered to be the basis of Guyana as it has historically, and still, is the dominant industry, contributing to just under 20% of Gross National Product and over 30% to foreign exchange earnings.
He assured that the government has been proactive to the changes with respect to the sugar industry that have been taking place, particularly within the Sugar Protocol and the Skeldon project is the most visible manifestation by the administration in responding to those changes.