SEPTEMBER 23, 2011 | BY KNEWS | FILED UNDER NEWS
By Leonard Gildarie
The US$181M Skeldon sugar factory, which has been plagued with a number of technical problems since its commissioning in August 2009, continues to be a source of contention between the owner, Guyana Sugar Corporation (GuySuCo), and the contractor, China National Technical Import and Export Corporation (CNTIC). According to Yusuf Abdul, General Manager of Technical Services at GuySuCo, at the beginning of the year, there were 12 defects, mostly minor ones, that CNTIC has to fix. Most are awaiting spare parts. However, he noted, there are two major defects that need attention and are the basis of a disagreement between the two entities.
One of these defects is related to the power generation component. The co-generation power plant has the possibility of using bagasse and fossil fuel, with the intention of having both integrated electrically. However, there have been problems with this integration, says Abdul. Then there is the cane conveyor which because of design problems is hampering the volumes that the factory would have been able to process. The two issues are being looked at with the aim of being resolved quickly, the official stressed.
Meanwhile, despite these setbacks, along with continued dismal worker turnout in Demerara and a current revised annual target of 17,000 tonnes of sugar less, GuySuCo remains confident that it will be not be declaring a loss this year. This comes amidst disclosures also that in some cases for the current crop, two-year-old ‘carried-over’ canes were used to produce sugar. During a press conference on Wednesday, GuySuCo’s senior managers, including Chief Executive Officer (CEO), Paul Bhim, made it clear that while the Skeldon factory outlook remains bright, there are still challenges.
Grinding for the second crop started on August 6, with the factory producing seven and a half tonnes as of Wednesday. The factory has now ramped up its speed to processing over 245 tonnes of cane per hour and this crop has already shown vast improvement over the first crop. While initially, the conversion rate from cane to sugar has been high, the factory has managed to bring this down to between 13000 tonnes of cane for one tonne of sugar, which is on par with budgeted figures. At the beginning of the year, GuySuCo had counted on the 500,000 plus tonnes on cane in the field being carried over to help achieve an ambitious 300,000 tonnes of sugar. Production has been dropping in recent years, with the industry putting out one of its lowest in almost two decades last year – 220,000 tonnes.
GuySuCo is working with the Chinese contractor, CNTIC, to resolve a number of defects at the Skeldon factory.
Bad weather, strikes and a low worker turnout, particularly in the Demerara estates, did not help. At Uitvlugt, the situation is so bad in terms of turnout, that the factory is unable to operate 24 hours, despite there being canes in the field. The reason is that there are not enough harvesters. But GuySuCo and government remain confident that high world prices for the sweetener in the US markets and CARICOM, would boost revenue and make up for the lost production. The revised target is currently stands at 283,000 tonnes for this year.
While in recent years, GuySuCo has been worried by the outstanding monies it has for creditors, including local and overseas banks, the Corporation indicated Wednesday that it has more breathing space this year. Last year, it owed creditors more than $6B (US$30M). However, a loan taken from Citibank in March, to the tune of US$17M, has already seen US$4.5M being paid back last week, and it is expected that payments will conclude by year-end. With respect to commitments to local banks, the CEO disclosed that while GuySuCo is behind “a bit”, the payments will normalise by this monthend.
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