– Estate producing at over US$0.70 cents per pound, others at US$0.40
By Kiana Wilburg
The Skeldon Sugar Factory is producing at an astonishing US$0.70 cents a pound while other estates are producing at $0.40 cents. As a result of its high cost of production, recently appointed Chairman of the Guyana Sugar Corporation (GuySuCo), Dr. Clive Thomas, is of the opinion that the $200M estate should be sold or used for other purposes.
But Kaieteur News understands that such a recommendation would pose some serious difficulties, as the Skeldon Factory has no co-generation capacity. Its co-generation plant was sold just before the General and Regional Elections held in May.
Documents reveal that on March 30, last, the then Chief Executive Officer of GuySuCo, Dr. Rajendra Singh convened a meeting where members of staff were informed of the previous Cabinet’s decision to transfer assets from Skeldon Co-Generation Plant to a newly formed company, Skeldon Energy Inc (SEI).
The effective date of transfer was stated as April 1, 2015 and GuySuCo was expected to receive a total of US$30M from the said transaction. There have only been three payments from NICIL thus far – $1,000,000, 000 on February 25, $2,070,000,000 on March 17 and $1,035,000,000 on April 17.
The sale took place without there being consultations with technical personnel from GuySuCo to solicit their views on the pros and cons of the proposed arrangement.
The co-generation plant comprises a diesel plant and a steam power plant. Currently, SEI operates and maintains the diesel power plant with a staff complement of 17 persons sourced from Wartsila Operations Guyana Inc. Records also show that the operations and maintenance of the steam power plant remain the responsibility of GuySuCo.
Given the crucial an inseparable link between the power generation plant and sugar production, this newspaper understands that recommendations were made to the GuySuCo Chairman for the steam power plant to remain under the ownership and management of GuySuCo.
It is also believed by senior officials within GuySuCo that the divestment of this key plant devalues Skeldon and denies it of a future income stream. With the aforementioned in mind, calls have been made to Dr. Thomas to have the transaction reversed and ownership of the co-generation plant revert to GuySuCo.
Given his position that Skeldon should be divested, Dr. Thomas was asked by this newspaper how this would be possible given the fact that it does not have its own co-generation plant.
He said, “Indeed the alarming cost of production by Skeldon calls for drastic measures. We have a big problem before us. Skeldon is one of the biggest factors leading to the inefficiency of GuySuCo and the sugar industry by extension. It is the worst performing estate and it cannot be allowed to continue as it is. Its cost of production is just too high.”
Skeldon’s efficiency has always come in for heavy criticism as it requires up to 18.5 tonnes of cane to produce one tonne of sugar. The highest producing estate is Albion which recorded 9,772 tonnes using an average of 9.7 tonnes of cane to produce one tonne of sugar in March, last.
Asked if he would push for the ownership of the co-generation plant to be returned to GuySuCo, the economist said, “That is my preference, to reverse the transaction, but it has to go to the board.”
Dr. Thomas said that in any case, the matter of the sale of the co-generation plant has been reported to the State Asset Recovery Unit which he emphasized, will investigate the entire transaction.
“One has to investigate who really authorized the sale of this plant without the permission of the GuySuCo Board, and what piece of documentation they were guided by that would allow them to do this just before the 2015 elections. Management and the GuySuCo board knew nothing about this, so this can’t be right.”
There is currently a Commission of Inquiry (CoI) into GuySuCo. Dr. Thomas currently sits as one of the Commissioners and he is tasked with Financial and Economic Analysis. Others involved include Mr. Vibert Parvatan who serves as the Chairman, and John Dow and Joseph Alfred who are looking at Factory Operations.
The CoI into the state of GuySuCo is revealing some realities. At the same time, it is becoming clearer to the Commissioners that policymakers will be faced with making tough decisions in the industry which employs over 16,000 Guyanese.
Dr. Thomas had said that one of these realities is that Guyana simply cannot compete on the world market with the giant sugar producers. The economist had said that Guyana needs to stop trying to compete, and to do so fast.
However, there seems to be, as the old maxim goes, “a silver lining in the cloud”. Dr. Thomas had said that sustainability and profitability of the industry can be had if focus is given to production for the domestic and Caribbean markets.
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