Apr 05, 2012 News
…contrary to agreement with Forestry Commission
An Indian company known more for its coffee beans than its furniture making, reportedly shipped out almost 50 containers of logs during the past two months, despite Government insisting last year that the same company was not interested in “large scale” exportation.
The majority of logs shipped out are said to be washiba, a hardwood used to make top end furniture. Also shipped were purpleheart, greenheart and snakewood.
Guyana has not made a secret of its intentions to drastically reduce logs export in favor of more downstream or value-added processing.
The former Bharrat Jagdeo administration had heavily defended the Vaitarna Holdings Private Inc. (VHPI) deal that the local media only knew about after the deal was published in the Times of India, rated the largest English language newspaper in the world.
With questions over the forestry concessions granted to VHPI, which is a subsidiary of the renowned Coffee Day Limited of India, in April last year, government had insisted that there was nothing secret about granting the concessions to that company.
Coffee Day is owned by V. G. Siddhartha an Indian businessman from Karnataka.
The Guyana Forestry Commission (GFC), which regulates the country’s forests, made it clear that the VHPI has indicated that it will be building processing facilities here.
“It has been established that in addition to log exports in accordance with National Log Export Policy, the company will engage in added value activities. The GFC has a policy of added value forestry activities and would have rejected any application from the company if it was solely interested in log exports,” former Minister of Agriculture, Robert Persaud, told the media during a press conference to explain the deal.
It was disclosed then that VHPI was issued a State Forest Exploratory Permit (SFEP) previously issued to Simon and Shock Intl. (SSI), a US company, and a Timber Sales Agreement (TSA) previously issued to Caribbean Resources Limited (CRL).
In April last year, the Times of India disclosed that VHPI had been granted 1.8M acres of forest land and was interested in shipping logs from Guyana for its furniture business in India.
There were immediate questions on transparency and accusations of a possible sweetheart deal involving government.
“This was essentially a reallocation of a suspended SFEP and a repossessed TSA that followed all the necessary requirements. When the original investors of SSI and the previous holders of the TSA now issued to Vaitarna were in default for so many years, there was no condemnation of these companies, especially by the commentators and political activists who are now vocal on this issue,” Persaud had said.
At the press conference at GFC’s headquarters in Kingston last year were Commissioner, James Singh; Chairman John Caesar and Head of Planning and Development Division, Pradeepa Bholanauth.
“The real facts are that a logging concession of 345,961 acres previously leased to CRL was re-allocated to VHPI. Contrary to what is reported, there will be no large scale exportation of logs, since the company has committed to get involved in downstream activities; in addition to logs exports in accordance with the National Forest Policy (NFP),” Persaud had said during the press conference.
He explained then that VHPI was also given approval to take over a SFEP previously leased to two USA-based investors after it was repossessed for non-compliance with the agreement.
It was explained at the press conference that the company first has to do a forest inventory; present a business plan that incorporates the inventory amongst other requirements, and conduct an Environmental and Social Impact Assessment (ESIA).
“In doing the ESIA, there will be at least two public opportunities for persons to indicate their support/ objection to the granting of logging rights to the company. Also, this process is led by the Environmental Protection Agency (EPA) and the Environmental Assessment Board (EAB).”
When this documentation is provided to the satisfaction of the GFC and its technical team, EPA, EAB, Cabinet Sub-Committee on Natural Resources and Cabinet; only then can approval for logging be given.
“So the process is far from over.”
The current National Forest Policy, under revision, does not say no to log exports, rather it encourages and promotes value adding, Persaud had asserted.
“The National Log Export Policy is testament to that – it provides strong disincentives for log exports; this would be revised in 2011 with the aim of providing even stronger disincentives.”
Regarding due diligence checks on VHPI to ensure that the company has both the finance and expertise, the Minister had said that a comprehensive one (check) was done.
“This due diligence has proven that the company has the necessary expertise to undertake the various tasks that are required. It also established that the company has sufficient financial resources, and has a track record of carrying out harvesting and processing operations efficiently.”
Not another Barama
Persaud had also shrugged off suggestions that the reallocation of the CRL concession as another “Barama deal”. “Barama Company Limited (BCL) or no other company which has been leased a forestry concession in Guyana has ever paid a cent (other than administrative fees) to access the forest resources.”
He emphasised that in the case of the Indian company, it paid US$3M to access a concession which is less than 25 per cent of BCL’s leased concession.
“BCL had consecutive five-year tax holidays and other concessions – none of which VHPI enjoys. BCL pays about $800,000 as acreage fees for access to 1.6 M hectares; VHPI has to pay $81.00 per hectare or $28 million for access to 345,961 hectares. This means that if VHPI had BCL’s acreage, it would have paid in excess of $120 million to the GFC.”
Regarding the $600M, it was disclosed that GFC and Government arrived at the figure through negotiations and cognizance of the fact that CRL was a subsidiary of CLICO, an insurance company which went belly up a few years ago.
“This is the first time that a company, in addition to paying the normal fees, would have been demanded to pay money as part of the application process,” the Minister disclosed.
VHPI paid over $600M (US$3M) to pay off CLICO policy holders in Guyana.
Asked then how long it may take before the Indian company can start harvesting should the green light be given, the Minister disclosed between two to three years.
Earlier this week, GFC’s Commissioner Singh when contacted on the containers of logs that were shipped out, disclosed that the company would be doing some processing in Guyana. However, it is unclear when this would start.
He however pointed out that the company has all its paper-works in order with nothing stopping them from harvesting and exporting.
A forestry official with close links to the VHPI, in confirming the shipment of the almost 50 containers of logs, said that company is in full swing of harvesting but was unclear of when there will be the establishing of processing facilities by the company in Guyana.
The company has also not sold wood locally, it was said.
Guyanese you are being prostituted by your politicians!
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