Recently, there was a verbal attack in Barbados on a messenger who was labelled as “bitter”. The attacker seemingly does not realize that such an onslaught indicates that the message of the deliverer could not be dealt with –– like the leaders of the Jews who could not deal with Jesus’ message, so they crucified him.
Jesus’ message still lives today!
There was also a Press release noting that the Government had signed a legal memorandum (if this is a binding contract why not call it that?) with Inter-Sugar Partnership Ltd (ISP) to proceed with the Cane Industry Restructuring Project (CIRP) “brought forward” by ISP, which is the Government’s “fix” for the long-suffering sugar industry. Said Press release unfortunately raised many more questions than it would seemingly have answered.
Before we can deal with those questions, however, we need to refresh our memories, given the murkiness that results from Goebbels-like activities. Remember that Joseph Goebbels, who was Adolf Hitler’s minister of propaganda, believed that “fiction repeated often enough becomes fact”.
In 2007, the then Government of Barbados proposed a CIRP that involved a new state-of-the-art multiprocessing facility (MPF), to be centrally located at Bulkeley in St George. That CIRP was estimated to cost $400 million. The then Opposition criticized that proposal, claiming it was too expensive, that there was no need for a new processing facility, and that instead the old sugar factory at Andrews could be retrofitted at half the cost.
Seven years after a change in the Government and over $400 million in additional losses, ISP “brings forward” a similar proposal now estimated to cost $500 million that involves “the construction of a state-of-the-art MPF, to be located at the site of one of the remaining factories at Andrews” in St John.
Note, this no longer involves a retrofit, but an expensive demolition of the Andrews Factory which the Government-owned Barbados Agricultural Management Company (BAMC) has made non-operational. Note also Andrews is situated at an elevation that is 500 feet higher above sea level than Bulkeley and is not as central, which will add significantly to the future transport costs of sugar cane.
Furthermore, Andrews does not have an independent water supply that is so necessary for a sugar cane processing facility and must utilize water inadequately supplied by the BWA at the expense of neighbouring residents who constantly complain about the inadequacy of their supply. This is after the Japanese told them that a retrofit would be just as expensive as a new facility and would be “penny wise and pound foolish”.
The latest change, apparently proposed by ISP, for a public/private partnership whereby private financing will build the facility and the Government will lease it, is necessitated by the Government’s inability to obtain financing for the project. Unfortunately such an arrangement will cost the Government more in lease payments then the debt service it would have had to pay under the original proposal.
The questions raised by the Press release included:
1. In selecting and engaging ISP did the Government follow established procedures for selection and engagement of consultants, or suppliers of services which are required for transparency?
2. How does the new memorandum/contract differ from the previous one with ISP that agreed to reward ISP with 12.5 per cent of the financing found for the project or about $62 million of the required $500 million in financing?
3. Will a copy of the new memorandum/contract be made available to the public or will it have to “fall off a truck” as is reputed to have happened with the previous one? Does the Government not realize that the more confidential and secretive it keeps these agreements, the less transparent they are? Or is the Government not accountable?
4. Is ISP legally registered in Barbados, if not, do the Government’s established procedures not require such consulting firms to be legally registered in Barbados, where they will be required to pay taxes on their earnings and be subject to the laws of Barbados? Has ISP disclosed who its owners and beneficiaries are, and will Barbadian authorities be able to scrutinize expenditures, along with the recipients of IPS’ largesse?
5. Given that there has been a smart change in direction which will not require the Government to add to its already heavy debt burden, will the public get to see the proposed “lease agreement”, which will commit the Government and/or its parastatal enterprise to lease payments that, by their nature, must amount to much more than the original planned debt service?
Is this not a case of “out of the frying pan and into the fire”? Will Barbados not be financially worse off with the commitment for such lease payments?
6. Electricity generated from bagasse, a sugar industry by-product, can rightly be labelled “green”, but can we rightly label electricity generated from river tamarind (Leucaena) “green”, since it will require significant amounts of energy for harvest and transport?
7. Has CIRP obtained an agreement with the Barbados Light & Power Co. Ltd to receive and distribute the 22MW of CIRP’s “green” electricity? What are the rates? How can CIRP barge into the electricity generating business when solar power generators (a truly green technology) had so much trouble obtaining just 5MW capacity in the first place? Will the Barbadian public get to see the agreement with the Barbados Light & Power Company? And what will the ramifications be for electricity rates to users?
8. Since the proposal no longer involves a retrofit, why is the MPF still being located at Andrews which is not central and has water supply challenges? Is the Government insisting on the Andrews location so that it would not seem to be admitting that it was wrong about the CIRP proposed by the last Government?
9. Are the project promoters aware that Barbados has had a public sector reform unit training staff, and has been installing new equipment, systems and procedures for more than 20 years with little tangible improvement in performance? Are the promoters aware that all people need incentives in the form of rewards and sanctions to improve their performance, and that these do not yet exist in the public sector in Barbados?
10. Do they really believe that this proposal has widespread support in Barbados? Is it not really widespread scepticism, given the history of the public sector-managed industry, the high capital cost of the proposal and the poor performance of the public sector?
11. Can there be any credible expectation for answers to all of the foregoing?
Round and round we go . . . !
(Peter Webster is a retired portfolio manager of the Caribbean Development Bank and a former senior agricultural officer in the Ministry of Agriculture.)