The troubled Skeldon sugar factory will soon be relying on the punt-dumper from the old factory which had been decommissioned in 2009.
This is another setback for the US$110M flagship factory which has encountered a plethora of problems leading to huge losses since 2009. For the last few years, GuySuCo has been trying to rectify the shortcomings of the factory.
Chief Executive Officer, Rajendra Singh told Stabroek News on Thursday that some of the in-house work that was done on the problematic factory included the replacement of all of the hydraulic seals while arrangements were being made to transfer the punt-dumper system from the old factory to the new factory. The punt-dumper system continues to be an issue for the factory. Since the factory was commissioned in 2009 the punt-dumper has been problematic.
During a meeting of the Economic Services Committee of Parliament on July 11, GuySuCo officials had revealed that the company would be needing to spend anywhere from US$4 Million to US$6 million for ongoing rehabilitation work inclusive of the punt-dumper system. Five years after the factory was commissioned and millions in additional work the system is still faulty.
Singh did not clarify if this amount would be in addition to the sum paid to the South African company Bosch Engineering to fix a series of problems at the factory since 2012. GuySuCo had said that the Bosch works cost US$1.8 million. Stabroek News has been told that the figure is far higher.
Stabroek News was told by senior technical staff that the hydraulic system is designed based on a certain period for each rotation. The speed is thus predetermined which essentially means that the factory’s purported ability to grind 350 tonnes of cane an hour was never possible. Based on a maximum of 38 lifts per hour and the 6.5-tonne capacity of the punt, the system could grind at a maximum 247 tonnes. This would constitute a major downgrading of the rated capacity of the Chinese-built factory.
GuySuCo technicians had stated last year to Stabroek News that instead of the hydraulic system “A winch system would be better for the punt-dumper, the current hydraulic system takes about three minutes for a full rotation”.
The punt-dumpers for the Skeldon factory had been supplied by US company Honiron and installed by the Chinese contractor CNTIC.
Singh also told Stabroek News that works were being done to replace all the tubing in the boilers. Much of the work Singh spoke about was upkeep and maintenance, but some facets should have been included in the Bosch contract considering the components they were working on. Last year Stabroek News was made to understand that Bosch’s first project was the construction of a 600-tonne condensate tank followed by the installation of a plow boiler along with pipe support, so sources say to have Singh say that just a year later GuySuCo was doing in house tubing replacements was somewhat surprising.
So far for the second crop, GuySuCo has produced just under 10,000 tonnes of sugar with all estates grinding except for Skeldon. Singh stated that last week, Albion and Blairmont made their weekly targets, while having to deal with an average worker turnout rate of 60 percent.
The second crop should be around 141,000 tonnes of sugar paired with the first crop of 79,995 tonnes. The target for the year is 216,000 tonnes.
During the first crop GuySuCo was able to end with a 79,995 tonnes tally, surpassing its target of 74,000 tonnes. The state-owned corporation came under criticism after it kept Skeldon grinding to achieve its first crop target even when daily production levels fell to a meagre seven tonnes in some circumstances.
Addressing the debt
Singh on Thursday addressed the need to reduce GuySuCo’s operating costs which he estimated were $4 billion monthly. The corporation has an overall debt of $58B with $19.4B of this being short-term debt. It was revealed during a meeting of the Economic Services Committee of Parliament on July 17 that GuySuCo was forced to take out a US$15 million loan from the National Commercial Bank of Jamaica to cover the operating costs of the company and that outstanding debts with local banks were still at $2.2 billion.
The CEO noted on Thursday that GuySuCo had over 16,000 employees and a corporation that large had a huge monthly cost. However, this has been an ongoing issue and critics have pointed out that with the company being $58 billion in debt, with $22.4 billion (US$112M) stemming from loans for the beleaguered Skeldon Sugar Factory, it cannot afford to operate under business-as-usual practices.
GuySuCo’s debt of $58B is equivalent to 31.6% of this year’s budget before cuts by the opposition or 26.3% of the original presentation by Finance Minister Dr Ashni Singh. GuySuCo’s production has slumped over the last decade and international market conditions have not been attractive.
For 2013 and 2014, the state-owned corporation was given a total of $10 billion via subventions.
Singh told Stabroek News that the lag in formally announcing the new Board of Directors was a result of two of the persons approached not having provided an answer as yet. President Donald Ramotar had said during a press conference on July 26 that the new board was to be announced the following week.
Singh said that while they are awaiting responses from the two outstanding invitees it was becoming clearer that there would be no representation from the Guyana Agricultural and General Workers Union following union head, Komal Chand’s refusal of the President’s invitation to sit on the board.
GuySuCo’s CEO stated that the invitation was made to Chand by the President and did not have to do with the current management of the sugar corporation. He said that there have been no moves by GuySuCo to make arrangements to have another GAWU representative sit on the board. While Chand has said he is not prepared to sit on the board, he is open to a role for a GAWU representative.
Chand had told Stabroek News that since writing the Agriculture Minister Dr Leslie Ramsammy on the matter of the board appointment, GAWU is yet to receive a response. He said that the union is still hoping that the corporation allows a member to be represented so that the union’s needs and frustrations can be better ventilated.