Skeldon  Estate woes force discussions

“I believe within another year or so, Skeldon will be blasting!”- Armogan

By Leon Suseran

Region Six Chairman, Mr. David Armogan, is confident that the malfunctioning Skeldon Sugar Estate will become more viable in a year or so. Armogan recently stated that from his interactions with officials at that estate, and from information provided, there is going to be a turn- around of fortunes at the problematic sugar factory located at Skeldon, Corentyne. The Chairman noted that the factory had “major problems” when it started over a year ago, “but the problems have become fewer and fewer.”

Region Six Chairman, David Armogan

The Skeldon situation has continued to be an embarrassment for the continuous administrations of the ruling party. The US$200M project, which included the factory and expansion of cane fields, was hailed as a saviour for the industry. However, the Chinese-built factory has been a drag on the entire industry, with costs of production way above that of the other six estates in Berbice and Demerara. Former President Bharrat Jagdeo had vowed to personally see that Skeldon’s fortunes turn around, but there has been silence in his corner for one of his babies. Among some of the biggest problems for the new factory is the punt dumper which takes the cane into the factory. It has been faulty from the start, despite over $1B spent by Government to fix that and some other issues. Another problem is that the capacity of the factory requires lots of canes, something that cannot be supplied at the moment. For hours on end, workers say, the factory would stand idle waiting on cane, an intolerable situation. However, Armogan credited the last performance in the crop for Skeldon Estate “as the best” it has ever been, since its inception. Recently, the factory recorded one of the worst performances of the four Berbice estates during the last crop. Skeldon, the newest factory in the country which was only commissioned in 2009, fell behind the target by 5,449 tonnes, closing with 21,813 tonnes for the second crop.

Troubled Skeldon Factory

According to figures provided, the factory also for the second crop, required an alarming 26.9 tonnes of cane to produce one tonne of sugar, more than double the industry average which stood at 12.9 tonnes of cane to one tonne of sugar. But Armogan is positive about a more successful sugar industry in the not-too-distant future. He said that the Tonne/Cane per Tonne/Sugar (TCTS) tapered off during the last crop to 14.5. Also, despite the controversial manager at Skeldon Estate, Armogan credited Devendra Kumar for doing a good job, “in bringing back the efficiencies that were lost…I think he paid attention to where the excesses were and where he could have pulled back by cutting finances and so. “He did that and managed to bring down the cost of production at that estate in a big way because of the measures that were implemented by this Manager when he went to Skeldon Estate.” The official admitted that he would be kept abreast on the situation at Skeldon and other Berbice Estates from time to time, “to find out how they are going…we have a very close relationship.” The first blow He alluded that prior to 2011, the European Markets indicated to Guyana that they would no longer be giving a guaranteed price for sugar in Guyana or in the Caribbean, “and they want us to work with the open market system— whatever was the world market price for sugar, that was what we were going to get.” Armogan described that situation as “the first blow” to the sugar industry.  Since then, the price for sugar, he added, has reduced by more than a third. “Even though, at that point, we were producing at a break- even…when the one-third drop in price, as a result of the actions of the European Union (EU), [it] virtually put the sugar industry on its backfoot.” He added that one of the ways the government thought to fight the drop in the prices of sugar, was to modernize and increase efficiency within the sugar industry, reducing the cost of production, “because once prices start to go down, your only option is to start reducing your costs.” Thus, the Skeldon Sugar Factory was constructed and everyone thought that with its high production, the situation would become normal again, “and  hopefully the whole industry, with a buffer from Skeldon, would have been able to reduce the cost of producing sugar, to somewhere at a break- even…” At the moment, the cost is more than seven US cents per pound of sugar, more than what is being collected on prices. Works going on to fix Skeldon Armogan admitted that the factory “encountered problems from day one, and work is still going on at the Skeldon Factory to make sure we can bring it up to that level of efficiency whereby we can reduce the cost of producing a pound of sugar.” He said that currently, both local and foreign engineers are working assiduously to bring the factory up to an acceptable level of standards.  They are working on mechanical equipment to ensure the estate becomes more profitable in the near future. “I believe within another year or so, Skeldon will be blasting and once Skeldon gets blasting, the sugar industry is going to come up back again!” “Not too far from now, Skeldon is going to be what we want it to be!” He does not believe monies are being wasted to fix the Skeldon Estate and even believes the project itself was “beautifully conceived and I think it was a project that had its merits.” “We didn’t get the efficiencies right and that’s what we are working on today.” Sugar levy The official noted that it was the sugar levy that kept the industry going for many, many years, even when the other sectors were not doing well. Armogan said that Guyanese need to understand the true importance of sugar in people’s daily lives and for the economy and do all that can be done, “to help sugar get back on its feet.” “Sugar used to buffer the Guyanese economy— when Cheddi {Jagan} took over in 1992, one of the first things he said was that he would remove the sugar levy, and when he came into Government, he realized that if you take that levy off, the country (would) go into bankruptcy and he couldn’t do it!” The Regional Chairman said that the persons and groups who peddle the ideas of wanting to close down the sugar industry, “do not know the history of sugar in this country and they don’t understand what they are talking about; because our history in Guyana is intricately intertwined with the history of sugar plantation in Guyana— it’s in our blood!” The Chairman also mentioned that the other factories in Berbice are doing quite well. Albion Estate, he said, has produced more than 5,000 tonnes above their targets, while Rose Hall produced 2,000 above its targets. “Once Skeldon begins to pick up its true capacity, we are moving!”