EU plugs Gy$ 6.5B into sugar industry – pact for hydropower in Kato also signed

By Ariana Gordon

Government and the European Union (EU) last Friday signed two financing agreements to the tune of Gy$ 7.1 billion (27.4 million euros) for a micro-hydropower system in Kato, Region Eight, and budget support for the ailing sugar industry.

The agreements were signed by Finance Minister Dr Ashni Singh and EU Ambassador Robert Kopecky in the presence of EU representatives and other officials of the Finance Ministry. The EU had approved a project for the development of a micro-hydropower system on the Chiung River, Kato, Region Eight. The micro-hydropower system will aid in promoting the use of sustainable and climate-friendly energy.

The total cost for the project is Gy$ 615 million (2,455,797 euros), with the EU contributing Gy$ 460 million (1,841,848 euros) under the 10th European Development Fund (EDF) and the government contributing Gy$ 154 million.

That system will enhance government’s broader hinterland electrification programme, and it will comprise a 330 kilowatt micro-hydropower station with its primary energy source being the 36m head waterfall in the Chiung River in the vicinity of Kato. That aside, a secondary school is to be constructed as part of the project by the Education Ministry.

The generating capacity will also provide services to other existing government buildings, such as the nursery and primary schools, the guest house, the police outpost, medical facilities, school dormitories, and to also facilitate agro-processing and commercial farming. Residents of Paramakatoi will also benefit from electricity through a 16km transmission line that will be set up as part of the intervention.

Kopecky noted that all has not been “pink and rosy”, but they “are getting back on track when it comes to the needs of the country, and when it comes to the possibility of European money being available in the form of development funds, development cooperation.”

The EU, he said might disburse crucial sums of money to follow through on its “green” projects, but it will not be the only party to contribute, because the Guyanese government will be contributing very substantial sums to the projects.

Dr Singh noted the importance of the two agreements, pointing out that they not only represent a significant milestone in the relationship between the EU and Guyana, but the agreements are being signed in two “areas that are central to our national policy agenda”.

With regard to the hydropower programme, he said it should be viewed in relation to the country’s Low Carbon Development Strategy.

“We have said that we would like to bring electricity in every home in Guyana. We recognise that given the geography of our country, it would be difficult to have a single national grid that would see the delivery of electricity to every home, we have a national grid on the coast obviously, but it would be sub-optimal for that national grid to extend to hinterland communities/ villages. So, we have been seeking solutions outside of the national grid to deliver electricity in homes of communities that are distant from the coast.” Inclusive in those solutions was the provision of solar panels to hinterland communities.

Sugar support

Meanwhile, in the sugar sector Gy$ 6.5 billion (24, 924,000 euros) will be provided this year as part of the framework of the accompanying measures to the changes in the EU trade regime with sugar protocol countries.

Kopecky said that the issue of sugar is very sensitive to both sides, noting that with the new scheme of the world economy, the World Trade Organisation (WTO) forced the EU to review its preference mechanisms that were being applied to countries like Guyana across the world.

“We were forced/ pressed to move from the preferential regime to that one, but doing that, we tried to do it at least in a smooth way,” he said, noting that the accompanying measures programme is geared at helping the governments of the countries involved to deal with the new situation of price cuts. Kopecky noted that traditional industries such as sugar and banana would be expanded to suit development.

In Guyana’s case, the money will be used to continue the modernisation of the sugar sector and enhance the agricultural sector of the country to meet the demands of the 21st century.

The head of the EU’s delegation in Guyana emphasised the importance of the sugar sector in the economy of Guyana, and the vital role that the EU’s support plays in enabling the sugar industry to become more competitive. The capital investment for the sake of improved competitiveness will be absolutely crucial, he added.

Similarly, Dr Singh said the government of Guyana has long realised the need to implement reforms in the sugar sector, so as to achieve “a competitive and viable sugar industry”.

“We have developed an action plan, which involves a number of elements aimed at achieving exactly this, a viable, competitive and profitable sugar industry,” he said. As a result, he said government has invested lump sums in the sugar sector with the hope that it will become competitive. “… look at investments over the past 10 years – we would have invested in excess of US$ 200 million in the sugar industry. A lot of this has been supported by our EU partners and I can think of a number of manifestations of this support…”

The minister told the media in his brief address that investments such as the Enmore Packaging Plant “is absolutely critical” to ensure the sugar industry profits in the long run. This programme, he said, will see euro $ 24.9 million being delivered under budget support mechanism. Asked what the money will be used for specifically, the finance minister said that the programme is being delivered using “what is called a budget support modality as opposed to a project support modality”. He said as a result, the support is received as a result of achievements made based on objectives set.

Funds will also be channelled towards studies, evaluations and audits to ensure effective implementation. He said specific indicators were identified, and the grants are tied to the indicators and targets. “In order to achieve those indicators, the industry has to make the necessary investments for those things to be realised,” Dr Singh said, while pointing to government’s investment in the sugar sector.

Meanwhile, asked whether the EU is satisfied with Guyana’s use of the money for the said industry, the EU ambassador said, “We would not have been here if we weren’t satisfied, and giving the greenlight to go ahead.”

He noted that there is a high-level of accountability, not only on the part of the government of Guyana, but also on the EU delegation here. Kopecky added that the indicators used will be improved over the years, while noting that GuySuCo’s current capacity of approximately 400,000 tonnes of sugar proves promising.

Since the start of the programme in 2006, the EU has made available 72.5 million euros to the government of Guyana for the sugar sector (approximately Gy$ 19.3 billion at the current exchange rate).