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Problems abound at new Skeldon Sugar Factory
– major component failures, structural issues among observations
An aerial view of the Skeldon Sugar Factory
Alliance For Change (AFC) Chairman Khemraj Ramjattan yesterday told the media that problems abound at the new Skeldon Sugar Factory, with information available to the party suggesting that major component failures at the facility have occurred in test runs.
He noted that information at hand also suggested that structural problems have been discovered which have caused the Guyana Sugar Corporation’s administration to hastily commence repairs of the old factory.
The party called for the revelation of the truth, saying that it was a Governmental responsibility.
Meanwhile, the Guyana Sugar Corporation (GuySuCo), in a statement last evening, sought to clarify its position by saying that the new factory at Skeldon is a turnkey project, which meant that the responsibility for the design, construction, commissioning and handing over of the factory is with the Chinese.
“They started commissioning the factory on August 25, 2008, and encountered some
problems…It is the responsibility of the contractor to rectify any problems, and Guysuco will not take over the plant until it has been fully tested and proven, as stated under the terms of the contract.”
The statement added that the old factory at Skeldon was deliberately left intact at the end of the first crop as a contingency measure in the event of any unforeseen problems with the commissioning of the new factory.
“Plans that were already in place are being activated to start up the old factory to ensure that the current crop can be taken off.”
The AFC also noted what it called the recent shortfall in reaching the European Union’s quota of 55,000 tonnes of sugar on or before September 5, 2008, and the massive loss of revenue totalling approximately US$1.5M.
This, the party noted, was a direct result of massive management inefficiencies and outright incompetence by the leadership within GuySuCo, “The over-used excuses of weather and industrial action by sugar workers are grand misrepresentations to hide the troubles brewing within the industry….The AFC thus views the situation in the industry as dire.”
The sugar company responded via release by stating that the current quota year runs from July 1, 2008 until September 30, 2009, noting that it was a 15-month period and brings to an end the Sugar Protocol.
“GuySuCo was attempting to optimize deliveries to the EU prior to the cut in price, on October 1, 2008, from €496 to €448/t…There was never any threat to our quota supply, and delayed shipments only meant that sugar received by the EU later than the 1st October was sold at the lower price, which resulted in GuySuCo losing out on US$1.3M in revenue.”
The statement went on to say that, as a result of several factors, including inclement weather, strikes and slippage in the operation of the new Skeldon Factory, the ships that were contracted to take the sugar to the EU were delayed and caused GuySuCo to pay demurrage. This is a charge that is agreed between a shipper and the owner of the vessel in what is termed a charter party.
The statement also noted that if the ship is sent off earlier than planned, GuySuCo earns dispatch, and if it is delayed then GuySuCo pays demurrage, at agreed rates. The demurrage paid was US$200,000 giving a total loss of revenue of US$1.5M.
When contacted last evening, the Minister of Agriculture told this newspaper that, “The AFC wants to score political points on the many issues facing the sugar industry, including the EU price cuts.”
He noted that the unilateral price cuts will see the corporation losing annually $7 billion in revenue, “There is too much at stake for the corporation, workers and the country for GuySuCo to be used as a political device by the AFC.”
Persaud added that, “When the EU sugar market regime changed, many persons now in the AFC leadership were against the government’s resolve to save the industry, preserve GuySuCo’s important contribution to the national economy, and protect the workers’ welfare.
Several countries closed their sugar sectors, but the Government has sought to restructure and modernise Guyana’s to meet the difficulties…Now, instead of recognising the challenges faced and the need for continued improved management, as the Government has insisted, the AFC is hoping to stir resentment and misrepresent the facts.”
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