Cost of US$12.5M packaging plant questionable

May 24, 2011 | By | Filed Under News 

Kenya installs four times bigger plant for US$3M

There are questions over the seemingly high cost of the recently commissioned US$12.5M ($2.5B) sugar packaging plant at Enmore.
Last week, Christopher Ram, a newspaper columnist/accountant, in an article, noted that Kenya’s largest sugar company, Mumias Sugar Company (MSC), had recently built a packaging plant for US$3M.

Modifications works were done to link the old Enmore factory to the new packaging plant at right.

The Kenyan plant consisted of 11 packaging machines, supplied by Brazilian companies, and has the capacity of producing 700 tonnes of sugar daily. This means that the Kenyan plant can bag over 200,000 tonnes of sugar annually.
However, the Enmore plant has five machines and an annual capacity of 40,000 tonnes. The Guyana Sugar Corporation (GuySuCo), asked to explain the extremely high cost when compared to the Kenyan plant, said that upgrades and modifications to the aging Enmore factory were conducted to the tune of US$8M ($1.6B) alone while the balance of the money, about US$4.5M, was for a warehouse and the packaging machines.
If the more recent figures provided by the sugar company are to be believed then the Enmore plant also costs US$1.5 million more that the Kenyan plant.
GuySuCo’s Chief Executive Officer, Paul Bhim, in response to emails, said that he does not believe that the Mumias plant included a factory upgrade or warehousing facility.
The packaging machines for MSC were supplied by Brazilian companies Brazafric and Raumak. Guyana imported its machines from India.
The Enmore project was financed by the European Union under special measures to assist Guyana, following a 36 per cent price cut by GuySuCo’s biggest customer there.
The plant was built by Surendra Engineering Corporation, a Mumbai-based company that is building two turn-key refinery facilities in Sudan. Surendra says that it has partnered with UK’s Tate and Lyle and Booker Tate.
Ram in his article last week wondered why Guyana had to travel to India for the packaging machines while MSC turned to neighbouring Brazil for its purchase.
The new packaging plant will enable MSC to produce smaller-sized sugar bags with only 30 per cent marketed in 50kg bags. With the technology installed at the plant, MSC will now be able to produce sugar packaged in various sizes, ranging from 125g to 250g, 500g, 1kg and 2kg – moving away from its traditional business of supplying larger quantity packages to pre-packed produce, according to http://www.packaging-gateway.com/projects/mumias-sugar/.

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