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Skeldon Sugar Modernisation Project for August 8 handover

Jul 12, 2008 News

Minister of Agriculture, Robert Persaud, along with the senior functionaries of the Guyana Sugar Corporation (GuySuCo), yesterday met with the Economic Services Committee to clarify several outstanding issues pertaining to the Skeldon Sugar Modernisation Plant (SSMP).
The GuySuCo team included Chairman of the Board of Directors, Ronald Alli, and Chief Executive Officer Nick Jackson.
One issue raised was the delay in the projected start-up date, given that that date was supposed to have been in 2006 and was therefore behind schedule.
According to Persaud, there was never an agreement to deliver the factory in 2006. 
The Agriculture Minister told the committee that, originally, the project was conceived in the late 1990s, but due to Guyana being classified HIPC (Heavily Indebted Poor Country), it delayed the start of the project until 2004. 
To compound the situation was inclement weather in early 2005 and the signing of the contracts, which did not take place until late January 2005. 
“The original date for completion was October 2007…Due to increased piling and other delays, because of weather and visa issues, the project is now due for completion on August 2.
Persaud emphasised to the committee that the stakeholders were contractually obliged to supply cane to the new factory from August 2, with a date of taking six days later.
“The Chinese contractor then has 28 days from the date of taking over to achieve taking over….If this is not achieved in that time, liquidated damages then apply.”
Another issue addressed yesterday during the meet with the Economic Services Committee was that of projections and resources.
Persaud told the committee the new factory will require a minimum of 1,365 hectares of land for the start-up of the new factory.
The 312 hours of operation at 350 tonnes of cane per hour would require 109,200 tonnes of cane, which would relate to 80 tonnes sugar per hectare.
As it relates to the prognosis on the cost of production, the factory had downtimes waiting for cane during the crop year ranging from 10 to 40 per cent. Persaud said that “the factory is designed to have more capacity than the cane available on the estate, as the factory was expanded by a factor of four whilst the estate was expanded by only a factor of three…This was because the estate was expanded with mechanisation as the key factor, which requires dry weather. ..
“Therefore, when there is wet weather, the factory will stop grinding; and once dry, will be able to catch up…The factory is designed to operate for 25 weeks per year at full capacity.”
As it relates to the electricity aspect of the factory, the committee queried what was the current output of electricity from the Skeldon co-generating plant, and of that output, how much would be supplied to the national grid, and at what price.
The Agriculture Minister responded that the factory has not yet been commissioned. Currently, the plant is capable of producing 10MW of engine-generated power. 
He added that due to the delay in the 69 kilovolt transmission lines, the output has been restricted; and to compound the situation, there was also a problem with the 5MW engine, “It is under warranty and will be operational again during July.”
Persaud noted, also, that negotiations were ongoing for the finalisation of a Power Purchase Agreement (PPA), hence the price was not yet available. 
“The factory has not yet started producing co-generated power, so it is a little early to know the exact costs of production. Practically, all of the power currently generated goes to the national grid.”

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