The Social Contract remains the linchpin, only and only if the sector is viable. Therefore let us put up our best endeavour to consolidate this sector, by ensuring that Our Serengeti should not die
It is the title of a great book written by two authors – Bernhard Grzimek and his son Michael. The book gives some perspectives on the survival chances of rural Africa and Serengeti in particular. Michael died in the process of “preserving this beautiful place i.e. the plains and its magnificent wildlife.”
As a nation we have to draw inspiration and learn from the experiences of dedicated persons. My plea to all of us is to put up a common front to save our Sugar cane industry.
Cane is priceless and like a gem that constantly needs to be polished. It is a great carbon sink, making our landscape green and preserving our lagoons from runoff during torrential rain. A prominent Chinese entrepreneur who was here in 2011 to know more of the seamless extension of AGOA told me that he enjoyed watching our clear sky.
Sugarcane is our Serengeti and it should not die. It is the lifeblood and has irrigated the economy of the country and helped constantly to reconcile social and economic factors. All the stakeholders of the Sugar industry with the planters and factory workers in the forefront have been subsidizing the emerging sectors which are the engine of growth.
Demise of Sugar Protocol
Since the demise of the Sugar Protocol the Commercial landscape has changed and market forces have become the major deciding factor. Economies of scale rule the waves. As from 1996 Government had redefined its mixed policies to cluster the sector. Nevertheless, much remains to be done and since time is of an essence, I appeal to the Ministerial Committee to be chaired by the PM to act decisively. Brexit with its uncertainty and the future of ACP-EU relations which is deemed to be revisited in 2020, compel us to be effective and proactive.
The Corporate-centric Joint Technical committee Report on Sugar was circulated prior to the budget. Though I do not dispute all the facts, it is certainly not a reference document to the Ministerial Committee. Since sugar is the umbilical or organic link between miller and planter that confers equal rights and obligations on all partners, there should be no disproportionality.
Hue and Cry
Despite hue and cry from wider section of the public, there was no concrete measure announced in the budget to ward off threats and to grasp opportunities. Not a single word on the merits of the standing sugar cane as the best Carbon dioxide cleanser, as a great Cluster with all its downstream products, nothing on IPPs and its shareholding. Yet the survival of the sector depends upon timely negotiations to conclude new IPPA (Independent Power Purchase Agreements) with the CEB (Central Electricity Board).
One of my concerns is that only an amendment to section 67 of the SIFB ACT was introduced. Clause 18(a) of the Finance Bill makes provision for a loan of Rs 800 million to be granted to MSS as an advanced payment to planters. The loan has been extended to planters on the assumption that the price on the world market will go up.
According to reliable sources from the ISO (International Sugar Organization), due to bumper crops in India and Thailand and storage capacity facility, a surge in sugar price is unlikely over the next four years. The PM will have to give firm guarantees to planters especially to those who have up to 5 hectares that the loan reimbursement would not be borne by them.
The Ministerial Committee would have to shed light on the revenue streams of planters and métayers following:
- a) Money credited to the Cane Sustainability Fund by the CEB. Will the fund be sustained if the windfall gain of CEB starts to dwindle?
- b) Additional revenue to planters subsequent to money being credited to common kitty of the MSS following the 80% tariffs being imposed on sugar imports. Is it a paltry sum of Rs 200/ ton of sugar that will be credited to the account of planters?
- c) Fair remuneration to planters on by-products of standing cane.
To allegedly streamline procedures SIFB is proposing one account for small planters. Since risk profile is not the same in any factory area most planters will get less compensation at the expense of higher insurance premium. In the meantime SIFB is disposing assets at give away price and has made acquisition of 6 acres of agricultural land at an exorbitant price of Rs 115 million. The broker of this scandalous deal is no other than a staunch agent from Constituency No 8. SIFB is going on a spending spree with hard earned planters’ contribution, and in doing so has proved to be servile and subservient to the political masters at the detriment of planters. As such, the board members of SIFB have to be held accountable. Unfortunately CEB which has to renegotiate IPPA is hell-bent to undermine the sector.
The interview given by S. Mukoon, Ag GM of CEB, on 13 Aug 18 in Le Defi goes against the recommendations of a recent board paper on the “demand supply balance -Ten years outlook.” CEB is deliberately coming with lame excuses to delay proper negotiations with IPPs to justify its acquisition of combined cycle gas turbine- 2 phased project at a cost of Rs 8.5 billion . To add insult to injury there are already three OCGT (Open Cycle Gas Turbine) meant for emergencies and peaking which are in good working order. A certificate of worthiness was recently issued following examination by experts.
Role of CPB
I believe that the Central Procurement Board (CPB), also has a fiduciary responsibility. As a trustee and custodian of the wealth of the nation it cannot simply rubber stamp a decision of any board.
Since 2015 to date CEB has accumulated windfall gains and instead of making judicious use of the financial resources to secure pension scheme of the employees which has a DEFICIT of more than Rs Rs 6.2 billion or to invest in smart grid, it is going on a spending spree and unnecessarily set up three subsidiaries with jobs for the cronies. Furthermore, CEB is also investing in properties and will construct a tower in Ebene.
Planning Period 2019- 2021 of CEB
Based on the analysis in respect of a second PPA of CEL, the Board paper “observed the aggregated potential savings of approximately Rs 236 million.”
What is CEB waiting to conclude IPPA? A comparative cost of electricity production shows Alteo at Rs 4.50 kWh is less expensive than Open Cycle Gas turbine which is Rs12.00kWh and Combined Cycle at Rs 8.00kWh. Besides, 50% of the biomass of Alteo will come from cane trash and bagasse.
An IPP can only generate a finite quantum of electricity and the use of cane trash would displace coal in sizable amount. Mr Mukoon should know that a ratio of mixed coal and bagasse at a parity of 1:1 is a noble objective but can only happen if there is bagasse and cane trash. The CO2 emitted by coal is absorbed by the cane plant which is a major carbon sink. No cane would mean only coal and no carbon sink.
It is a pity that in Mauritius we don’t have townhall meetings to discuss findings of expensive reports Commissioned by State Owned Enterprises. The report submitted in 2014 by SA firm Worley and Parsons on LNG should be the subject of debate at the bar of public opinion. The project is not financially and economically viable according to the findings of the report.
No Blame Game
I don’t want a blame game because we are all to be blamed. I propose that we should first put an end to encroachment on prime Agricultural land with a view to:
- Avoid power shortage as from 2021 CEB “May opt to trigger the option for an extension in the respective PPA contracts. There are already provisions under PPA to do so”. Alteo plant (2 times 35 Megawatts) has to be operational by 2022;
- Shareholders of IPP being equitably remunerated;
- Ensure fair apportionment of the by-products of the Standing Cane is imperative;
- Clustering this sector, in light of changes both on Domestic and International fronts.
One has to bear in mind that the Social Contract remains the linchpin, only and only if the sector is viable. Therefore let us put up our best endeavour to consolidate this sector, by ensuring that Our Serengeti should not die.
* Published in print edition on 24 August 2018