Three weeks test run costs $140M in fuel

Dec 30, 2008 News

The Guyana Sugar Corporation has spent a lot of money on fuel just to test-run the New Skeldon Modernisation Plant. The cost of fuel to test-run the new factory was astronomical.

During the three weeks of test runs last month the sugar company spent between $130 million and $140 million on heavy fuel oil, much more than should have been expended and money that Guyana could use in many other areas, including agricultural development.

A source said that there are to be other test runs, and the fact that fuel prices have fallen on the world market has saved Guyana. The price of fuel is about US$40 per barrel but when the tests were conducted the cost was about US$100. This lower cost would mean less expenditure on future tests, but it still spells disaster at the extent of fuel consumption.

The tests were mandated after Guyana recognised that the plant was taking much longer than necessary to be completed. The first tests were a disaster with engine failures and the like, prompting a return to the old and abandoned Skeldon sugar factory.

Subsequent repairs and modifications led to other tests, the most recent of which lasted for three days and which brought smiles to many faces because the system withstood the tests.

However, the cost of fuel was higher than expected.

The authorities still expect to recover this money when the new plant begins to sell electricity to the Guyana Electricity Corporation. However, the source said that at the rate at which the new plant would be using fuel it would end up selling power to the national grid at a loss, unless it sells power for even more than the power is being sold to consumers across the country.

Further, the threat by President Bharrat Jagdeo and the Guyana Government to slap punitive costs to the Chinese contractors could result in Guyana recovering some of the money spent on fuel at the New Skeldon Modernisation Plant.

The charges could also help Guyana recover some of the millions already lost to cane being discarded because the plant was not ready to mill the cane, some of which is about 80 weeks old.

Further, of the two cane dumpers acquired from an American company to add to the equipment at the new Skeldon factory, only one is operational. The cane dumpers lift the cane from the punt and feed it to the mill. The design of the American cane dumpers was all wrong. The engineers attached to Booker Tate refused to consult with the Chinese engineers in this area, another source said.

The Chinese have said that they are more comfortable with the local engineers than with the expatriate ones who form part of the Booker Tate team. Booker Tate, the company that currently holds the management contract, therefore refused to consult with the Chinese when it set about importing the cane dumpers at a cost of US$4.8 million.

The cane dumper was expected to feed 350 tonnes of cane per hour, but the American dumpers are feeding cane at a rate of 175 tonnes per hour – some 50 per cent of the required operational capability.

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Three weeks test run costs $140M in fuel

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