By Alexis Rodney
THE proposition that funds coming out of the promising oil and gas sector be used to further subsidise the Guyana Sugar Corporation (GuySuCo) runs contrary to any sound economic plan and would only thrust the country further into financial distress, economist Dr. Clive Thomas has said.
With the coming of oil and the vast economic prospects it brings, there is some hope that a percentage of the reserves could be used to back the sugar industry, eventually pulling it out of its financial and production woes.
But Dr. Thomas, speaking to the Guyana Chronicle recently, said the idea is not economically feasible. In fact, he said government needs to focus heavily on its initial plan of allowing the sugar sector to make itself viable.
The opposition People’s Progressive Party (PPP) continues to bash government over its decision to scale down the operations of the sugar industry and open more avenues for production.
Opposition Leader Bharrat Jagdeo at a recent gathering with sugar workers at Enterprise Village, East Coast Demerara (ECD), opined that the downsizing of the industry would leave tens of thousands jobless, as opposed to just about 1000 that will be afforded jobs from the oil sector.
He said the number of employment opportunities that will come out of oil cannot be compared to what is being lost within the sugar industry. To this end, he said that sugar workers will not benefit from the oil sector.
Former President Donald Ramotar had said recently too that closing the sugar industry to accommodate the oil sector is nothing more than a colossal mistake.
MUST PROVE ITSELF
Dr. Thomas said an industry that cannot prove its viability should not be furnished with public money.
“Why would you put public money in that industry? Why would you throw good money after bad money?” the economist asked.
He said government has already made some “bad decisions” with sugar in the past. This includes the Skeldon factory; an project government believes remains a “white elephant.”
“We should not be repeating those mistakes. The aim is to make sugar as profitable and viable as it can, but not to continue subsidising it, and certainly not to transfer wealth from other sectors including taxpayers or whoever else would be expecting to get benefits coming out of the oil wealth, to an industry that is declining,” he said.
Thomas said what government should do is focus on industries that have proven viability that could open up new sectors and new opportunities for the population that fit more into the modern scheme of things.
Asked if there was any way the funds coming out of oil could be used to cushion the effects of the downsizing, Dr. Thomas said government will have to make a decision on how it will handle the revenues.
Some of it he said, may definitely go towards welfare, to bolster the bad events of the economy and the citizens. That, he said, is called social protection.
“Sugar workers will definitely benefit from that”, he said.
In the long run, Dr Thomas said in order to make oil worthwhile, oil funds must be invested in areas that would yield returns and make themselves sustainable, not to “perpetually drain the economy.”
He again said he would prefer that sugar be allowed to prove itself viable through diversification, before giving any promises that come 2020 government would bail out the industry.
“That would be a very bad decision and send a very bad signal,” he told this publication.
When actual production commences in 2020 by U.S. oil and gas exploration company Exxon Mobil, based on the Production Sharing Agreement (PSA), Guyana will benefit from 50 per cent of the oil profits and 2 per cent of royalties.