Skeldon estate privatisation memo lists sugar output that was never met

The Skeldon Sugar Factory

The government has published its information memorandum on the Skeldon Sugar Estate for privatisation but questions might be raised about the declared capacity of 110,000 tonnes which has never been met since it went into operation in 2009.

Failure to attain its inscribed capacity of 116,000 tonnes of sugar per annum was the major shortcoming of the PPP/C’s Skeldon Sugar Modernisation Plan which ended up crippling the Berbice estate through high losses and low production. This in turn punched major holes in GuySuCo’s finances.

In its information memorandum on the Skeldon sugar estate, the National Industrial and Commercial Investments Limited (NICIL) and the Special Purpose Unit (SPU) highlighted as one of its major features “1,750 hectares of freehold land with 110,000 tonnes sugar capacity”. Controversially built by the Chinese company, CNTIC, the US$110m Skeldon factory never got anywhere close to the annual figure of 116,000 tonnes despite costly interventions several years ago by a South African firm. The failure to attain a grinding figure of 350 tonnes of cane per hour and 116,000 tonnes of sugar per annum put the then Jagdeo administration under severe pressure and the situation persisted all through the Ramotar administration and the first two years of the Granger administration until the factory was shut at the end of last year preparatory to divestment/privatisation.

The selection of the Chinese company for the construction of the new Skeldon factory in 2005 had been sharply criticsed and prior to its closure at the end of last year, production of 116,000 tonnes per annum was a distant prospect. The Skeldon factory also had a high cost of production of sugar – around US 40 cents per pound – far higher than world market prices.

The information memorandum also says that the factory was recently built. As construction started in 2005, that descriptor would not be seen to be accurate.  Other features of the Skeldon estate advertised are its water treatment, co-generation and diesel plants, inventories, equipment and rolling stock. It also cites a long-term lease tenure, initially 25 years, for 11,900 hectares of cultivated lands with an option to renew.

It also cited fields in 10-hectare plots, access to a well-established research facility and nursery with several cane varieties, 70% mechanisation from mechanical tillage/planting to harvest and a local pool of experienced factory management and a well-educated work force.

The memorandum for the period August 6th to 27th contains the timeline for bids, the process of ranking of bids and further details of assets for sale.

An information memorandum was also published for the Rose Hall sugar estate for the period August 15, 2018 to September 3rd, 2018. Among the highlights are 5,650 hectares of freehold land with a 37,100 tonnes sugar capacity factory.

The information memorandum on the Enmore estate was available from July 23rd.

NICIL/SPU said that that privatisation covers 25 acres of freehold land with 60,000- tonnes sugar capacity, a sugar packaging house and warehouses. It also has inventories, equipment and rolling stock. Furthermore, there is a long-term lease tenure – initially 25 years – of 6,900 hectares of arable lands with the option to renew.

Among other attributes listed by the advertisement were fields in five-hectare plots each next to a water transport system; access to a well-established research facility and nursery with several cane varieties, a local pool of experienced factory management and well-educated workforce, agreements in place for cane supply from experienced farmers using estate lands, 85% mechanisation from mechanical tillage/planting to harvest and “excellent” drainage and irrigation systems with new pumps. The advertisement also refers to Guyana’s oil future. It said large scale oil production is set to begin in 2020 and cited a quote by the New York Times that Guyana is “…poised to become the next big oil producer in the Western Hemisphere…”

Enmore is one of four estates that the APNU+AFC government is seeking to privatise. The others are Rose Hall, Skeldon and Wales.

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