October 8 ,2020
Sasenarine Singh
-CEO acknowledges challenges
Sasenarine Singh, the Chief Executive Officer (CEO) of GuySuCo yesterday said that two engineers are expected from India in January to advise on the best way forward in relation to the reopening of the Skeldon Sugar Factory.
Singh yesterday at the Blairmont Estate told Stabroek News that the policymakers have made it clear that the Skeldon, Rose Hall and Enmore estates are to be reopened. However, he said, of the three estates, the greatest challenge lies at the biggest factory, that being the Skeldon Estate.
Noting that he wished to be transparent, Singh said, “Skeldon has challenges in the power plant with regards to the boiler, they have challenges at the front end of the factory with regards to the diffuser and they had a challenge with regards to the hoist because even though it was designed for 350 tons of cane per hour it is not performing at that level”.
According to the CEO, the two Indian engineers are expected in Guyana by January “to interrogate” the Chinese-built Skeldon factory. As such, he said, once the experts arrive and commence their work, GuySuCo should be able to get a clear understanding of what needs to be done at the factory by June, next year. “And we can then take that to the policymakers to help make decisions on the way forward”.
However, he said, while they are awaiting that process they are also inviting private participants to join the intervention to fix the factory “and to see if they can bolt on a white sugar industrial grade… refinery”.
According to him, the reasons why he believes that would be a “natural fix” is because “Skeldon is right there on the ocean, a plant … there means the ships can come there, makes it easier to move this to the Caribbean region”.
Additionally, he stressed that in order to make that venture successful it would be supplemented with sugar from the Albion Estate.
The CEO said he believes that it is possible, noting that the Skeldon Estate can produce about 88,000 tons of sugar and if private cane farmers are to be included and supplemental sugar from the Albion and Rose Hall estates is used then it can work.
Meanwhile, when asked, the CEO confirmed that he has met with a few private cane farmers and that the Minister of Agriculture, Zulfikar Mustapha is expected to meet with a few of them soon also.
Abandoned
However, Singh said that a few have expressed concerns at resuming since they are returning from a history of being left abandoned when the estate and factory were closed.
“They are having some fears but we are working through those fears with them making sure we can get them back into the model to make it bankable for them”.
He added that he means “bankable” in terms of making it clear to them that they can make a profit if they are to return.
Meanwhile, Singh sought to point out that persons must understand that they received basically a “graveyard” at the Skeldon Estate and are now working from the ground up.
He said, “All the punts were sunk, we got to lift hundreds of punts out of the trenches, we have to re-bottom them, we have to buy equipment to now start tilling the land”.
According to him, the Skeldon Estate like the Rose Hall Estate has also started to rent private machinery to get the work started. However, he said that it is expected that by next year GuySuCo’s machinery will be used.
“So it will take at least all of 2021 and all of 2022 to have enough critical mass of sugar cane on the ground to be able to actually feed that monster of a factory (Skeldon)”.
Meanwhile, the CEO also stated that he has discovered people in GuySuCo who are committed and willing to work. He pointed out that the new estate managers came on board and immediately started to work and are now dealing with contracts for salaries.
He then pointed out that Rose Hall Estate Manager, Aaron Dukhia was caught in a protest in Region Five where his vehicle was damaged but that did not deter him from getting to work. He left his vehicle and caught a boat to get to work. “So this is what I’m seeing in GuySuCo people who are willing to go beyond the call of duty to make this work because this is all they know, sugar production, and they are committed to it so I think it’s our duty to help them”.
Failed
The Skeldon factory, built over several years by the Chinese company CNTIC and commissioned in 2009 by the Bharrat Jagdeo administration at a cost of around US$187m turned out to be the largest failed public sector project in the country’s history. It led Jagdeo to warn in October, 2010 that if the factory failed then “sugar was dead”. He vowed to take a hands-on approach. “So even if it means personally I have to get involved, I will get involved to ensure that it is fixed…that it’s delivering the kind of results that it should deliver so that we can safeguard the sugar industry.”
Unfortunately, his interventions were to no avail and the disastrous Skeldon factory drained GuySuCo of money and resolve. The factory’s annual projected output of 116,000 tonnes of sugar was never met despite costly remedial interventions by a South African firm. Its highest annual output of 39,153 tonnes was achieved in 2015.
It got nowhere near to its intended grinding figure of 350 tonnes of cane per hour and the situation persisted all through the succeeding Ramotar administration and the first two years of the Granger administration until the factory was shut at the end of 2017 preparatory to divestment/privatisation.
The Skeldon factory also had a high cost of production of sugar – around US 40 cents per pound – far higher than world market prices at a time when Guyana has lost access to preferentially priced markets.
The Commission of Inquiry (CoI) into sugar that had been convened by the Granger administration in 2015 reported the following: “From the commencement of the Skeldon project in 2005, when GuySuCo had to initially contribute US$25m from its EU (European Union) receivables over a period of (18) months commencing in 2005, the corporation’s liquidity declined rapidly. As a consequence, GuySuCo became heavily dependent on bank overdrafts, and extended credit periods to maintain the operations of the business. This was the start of the decline of GuySuCo’s financial position leading to its present state of insolvency”.
The CoI said that GuySuCo’s expenditure on the Skeldon factory to the tune of US$72m, the slide in the EU price and the drop in sugar production resulted in reliance on expensive overdrafts for working capital, delays in meeting creditor’s payments resulting in creditors refusing to supply or demanding payments in advance, minimal capital expenditure on the business, late purchasing of critical inputs leading to late fertilising and application of chemicals, significant loss of revenues and dependency on the Government for bailouts. Furthermore, the report said that US$7m had to be spent on corrective work on the factory. This financial impact had a debilitating effect as essential work could not be done on the other sugar estates, the report found.
