Jan 03, 2018 News
A power company at Skeldon Estate has the potential of becoming a centre of major economic activity in Berbice, a former Board member is insisting.
According Gobin Harbhajan, a regional councillor and the PM’s Representative in Region Six, the Skeldon Energy Inc. (SEI) operations, if developed in accordance with a number of proposals, could boast significant economic activities within the surrounding communities.
These include the collection, processing, and delivery of biomass fuel for the boilers which potentially could amount to 20,000 metric tonnes per month. This could include supplies of firewood, forest wastes; sawmill wastes; rice husks, rice straw and Cane Grass.
Harbhajan is estimating that as much as US$10M in business could be involved for suppliers in Berbice.
In 2015, SEI, a special state-owned company, acquired assets of the Skeldon Power Plant for US$30M. The equipment was in very poor operational condition and included a 10MW diesel power plant and a 30MW steam power plant.
The plant went into commercial operation in 2009. It was supposed to complement the new Skeldon Factory. More than US$120M was spent on the two.
However, the power facility was saddled with several design deficiencies was never properly commissioned because of contractual issues and major technical omissions.
During this initial year of operation, in 2015 under SEI, a loss of $30.7M was recorded due to the poor condition of the power plant, Harbhajan disclosed.
A technical audit carried out on both plants during 2015 indicated that the diesel plant can be rehabilitated, while the steam plant should be scrapped.
According to the former SEI Director, the entity entered an arrangement with Wartsila to rehabilitate the diesel plant at a cost of just over US$6 million.
“In 2016 the rehabilitation of the diesel plant was completed and placed into service to provide energy for sale to the GPL grid. SEI then turned its attention to determine the way forward with the steam power plant and made some significant changes to its mode of operation, while making some minor improvements. The result of these actions allowed SEI to generate an operating surplus of $145 million.”
Last year, Harbhajan disclosed, SEI concentrated its efforts on making the co-generation plant operational in a safe manner.
The plant will have been recording an operational surplus of $200M, a remarkable turnaround.
“During the period 2015-2017, the value of the assets of the power plant was increased by 30% as a result of the improved works carried out- all of it was financed internally from working capital surpluses.”
Over the last two years, SEI has been supplying energy to the Skeldon Factory and associated operations.
“GuySuCo has been paying the labour cost in the co-gen plant together with providing some supplies. Reconciliation of the relevant accounts have indicated that to date GuySuCo owes SEI an estimated $360M,” Harbhajan explained.
According to the official, from the commissioning time, it was clear that boiler of the plant would never work in the current configuration.
On top of this, it was clear that GuySuCo was out-of-its-depth by entering an entirely new arena- power production – without the necessary expertise and plan.
“The modern high-tech installation at Skeldon, which was regarded as a quantum leap above the applied technology standard prevailing within GuySuCo, implied that appropriate operations and maintenance management could not have been properly established within the latter’s prevailing management structure; and the resulting poor performance out-turn is now history.”
Rather, Harbhajan argued, a distinctly separate management or corporate structure would have been necessary, since sugar production and energy supply utility are distinctly different business operations.
The Berbice official warned that it is known that the co-gen plant will significantly deteriorate if and when it is left idle for extended periods- “This is a hot plant and cold corrosion is a major maintenance issue.
“The discontinuity of GuySuCo factory operations will cause the co-gen plant to rapidly deteriorate and could even be totally lost being left idle. Therefore, a major policy decision on the way forward is an urgent end of year (2017) necessity, without which the measures identified to avoid further co-gen plant impairment cannot be adopted.”
Harbhajan is proposing that to make the plant more sell-sufficient by way of a US$17M financing, obtained through suppliers’ credit and commercial bank borrowing. It may involve vesting of the assets of SEI.
With regards to the diesel section of the plant, Harbhajan urged for Finnish-owned Wartsila to continue its operations and maintenance arrangement.
“We have to start thinking out of the box. There is a facility here that with some tweaking will not only provide a stable form of energy but also jobs for the residents of Berbice.”
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