GUYANA: Failed Government Projects – Accountability and Controls Required — Opinion

Stabroek News Editorial

By April 22, 2022

In a recent column in this newspaper former Auditor General Anand Goolsarran drew attention to three major projects which had been financed by China’s Exim Bank and which he described as having failed. As a result the nation was left with significant debt. A fourth failed project to which he adverted had been funded by the Exim Bank of India. All of these ventures intended to develop the country had been embarked on when the PPP/C was previously in office.

The one which is often cited by critics as the classic case of a white elephant is the Skeldon sugar factory, the inspiration of Vice President Bharrat Jagdeo when he was head of state. It was intended as part of the Skeldon Sugar Modernisation Project which encompassed enlarged areas under cane, a refinery and co-generation of electricity for the national grid, estimated at a total cost of US$165 million.

A Commission of Inquiry into GuySuCo found that in the end it cost US$187 million, with US$56 million coming from the World Bank, US$32 million from China’s Exim Bank, US$24 million from the Caribbean Development Bank and US$53 million from GuySuCo itself. As we reported, however, the Commission found that the corporation’s contribution was supposed to come from the sale of its land around the country, but that did not happen, and as a consequence it had to use its own resources, an imposition which was exacerbated by the fact that it also had to bear the escalation in the overall cost from US$165 to US$187 million as well.

The contract for building the factory itself was awarded to the China National Technology Import and Export Corporation for the sum of US$110 million which was included in the US$187 million grand total, but the government of the time ignored recommendations from a Booker-Tate management company to terminate the contract. That company had been retained to review the design of the factory and oversee the implementation of the project as a whole. The government instead steamed ahead, and after the factory’s commissioning it was soon discovered it could not manufacture sugar at anything like the US12 cents a pound which had been promised, never mind the 110,000 tonnes per annum that it was slated to produce. In the end, the APNU+AFC administration did the obvious thing and closed it down.

It might be mentioned that the Chinese entity which was selected to construct the factory, really did not have experience in the realm of sugar which was necessary for a project of that size.

If the Skeldon factory is the largest project debacle in recent times, there are others.  Mr Goolsarran also dealt with the Cheddi Jagan International Airport, where he pointed out that the works were still in progress after ten years, with the completion date now set at June 20, 2022 when it was originally estimated to be August 2015. As for the cost involved this was first judged to be US$150 million, but has now been amended to around US$200 million. The former Auditor General gave the primary reason for the situation as the fact there were no feasibility studies prior to the award of the contract, and the lack of effective supervision of the works in progress.

There were other disquieting aspects to the contract among which was the fact that it was awarded days before a national election, and was not disclosed to the public which only found out about it via the Jamaica Observer. In addition, said Mr Goolsarran, it would seem as if one of the conditionalities of the loan was that the works had to be undertaken by a Chinese contractor. This is in contravention of Guyana’s Procurement Act, which requires competitive bidding for public contracts. Perhaps this was the reason for the secrecy. He also made reference to a visit made to the project by President Irfaan Ali in 2020, who identified 71 defects in need of rectification.

Then there were the One Laptop Per Family and Fibre Optic Cable Projects, again financed by the Exim Bank of China, the former worth the equivalent of US$7.686 million and the latter US$32.874 million. The auditors, said Mr Goolsarran, had found numerous irregularities relating to the acquisition, storage and distribution of the computers in the case of the first, while any number of problems in the laying of the cables accounted for the failure of the second.

Where the Speciality Hospital was concerned, that was funded by the Exim Bank of India, and the award of the contract to Surendra Engineering attracted considerable controversy. More problematic still was the fact that the contract was terminated after a mobilisation advance of US$4.3 million had been paid, and despite attempts this has never been recovered.

Skeldon, the One Laptop and Fibre Optic projects, said Mr Goolsarran, had “failed completely” to deliver in terms of objectives, outputs, outcomes and impacts and as a result had “encumber[ed] the Guyana public debt in the tune of US$115.4 million, with little or nothing to show for the expenditure incurred.”

In the columnist’s analysis, “The problem also appears to be a lack of effective accountability mechanisms to ensure that the funds are spent with due regard to economy, efficiency and effectiveness in the achievement of the stated objectives, outputs and outcomes…”

It might be added that there are other issues. All our governments have lacked the skills and inclination necessary for administering a complicated polity, which nevertheless until recently had a fairly rudimentary economy based on the export of raw materials. With the appearance of oil that economy has become transformed, yet we still lack the skills, the personnel and the institutions to administer it in such a way that it will benefit society as a whole, and not just a small segment of it. Where the complexities of oil are concerned, the government simply does not have anything like all the answers – beginning with the problem of the contracts.

For more than half a century our discussions as a nation have focused not so much on how we should be governed, as who should govern us.

Since the advent of free and fair elections governments, including the coalition, have operated as though a democratic majority however small has given them carte blanche, and they are not answerable to anyone about their decisions. As far as they are concerned their projects are aimed at development, and anyone who challenges them is seeking to prevent such development.

With all the money that oil promises the administration is steamrolling ahead with any number of high-visibility infrastructural projects costing eye-watering sums, like the Demerara Harbour Bridge and the gas to shore project. And no one is confident that it will be more careful about Chinese contracts than it has been in the past. Instead it continues to denigrate its critics, no matter how qualified, no matter how rational, no matter how committed to the development of the nation.

In order not to be impeded in its tracks, it has either emasculated existing watchdog institutions such as the EPA, which has performed very poorly following the removal of its head Dr. Vincent Adams on political grounds, or it fails to set up necessary bodies, or if it does set them up, makes sure it can retain some control, as in the case of the Natural Resource Fund. Autonomy is not a word which sits well with Freedom House, and neither did it do so with Sophia, when its party was in office.

This is a top-down society; there is little manoeuvrability for people at the grass-roots level. Even when local authorities raise objections, as was done on the West Bank over the removal of mangroves, they are ignored or bypassed. The fact that the government has certitude about its projects, does not mean that it is inevitably right. No government has a monopoly on talent or knowledge, while critics are not always wrong.

Among other things, Mr Goolsarran has reminded us of some of the earlier catastrophic projects on the record of the PPP/C government, three of which ‘encumbered the public debt with the sum of US$115.4 million.’ It is alarming that the government is determined to proceed in the same way it has always done, with no accountability, no controls and no adherence to the rules. We need a cultural revolution among our politicians, so they can accept accountability mechanisms, autonomous watchdog institutions, the devolution of power at the local level, and the seeking out of those with skills no matter what their political preferences. Most of all they need to learn to listen to those other than their own charmed circle. The government’s tainted legacy on projects from its previous years will not be forgotten; if it wants to change posterity’s perception of its actions, it has to start now.

Post a comment or leave a trackback: Trackback URL.

Comments

  • Emanuel  On 04/25/2022 at 11:03 pm

    When will the government of Guyana eliminate income tax?

    • Dennis Albert  On 04/27/2022 at 6:16 pm

      How else will Shell, Alphonso, and Nicholas Boyer are gonna get rich if the Guyanese taxpayer doesn’t foot the bill of their multi-billion dollar projects to get more richer?

  • Dennis Albert  On 04/27/2022 at 6:18 pm

    The staff at GPHC tell me that there isn’t even a painkiller for patients in certain cases. 11 billion barrel oil to make the Shell family insanely richer to import more Lamborghini. The Spanish man was right: Oil is the devil’s excretment.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: