There should be a commission of enquiry into the Skeldon Sugar Factory

Oct 09, 2010 Letters

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Dear Editor,
I refer to the recent announcement by President Bharrat Jagdeo that if Skeldon fails the entire Guyana Sugar industry can go down with it, unfortunately it is a little late in the day for Mr. Jagdeo to finally wake up to reality.
The failure is not only the factory, it is also the inability of the workforce and difficulties of mechanization to effectively supply the cane for that huge factory; the new factory requires 8,400 tons every 24 hours! The old factory only required 2,400 tons every 24 hours i.e. it needs 350% more cane every day, people like myself who worked in sugar all our adult lives, believe that this is unachievable. We knew from the very beginning that it was an impossible task to supply that increased amount of cane given the limited workforce and the limited mechanization potential at Skeldon. What we did not know then, was that this Government compounded that stupidity, went out and bought a factory from China which would be built by a company which had no real track record in building sugar cane factories!
We must remember that the IDB was not convinced that GuySuCo had viable economic plans for the industry and refused to finance it, therefore in addition to the supply of cane problems we visualized, and which we spoke about as early as 2000, the bad situation was made impossible by building a factory with so many flaws using a Chinese company with no experience.
Mr. Editor here is the story, the Government of Guyana in a desperate attempt to up production and refusing to accept that the European Union could cut the subsidy of Guyana’s sugar price, decided to expand our sugar industry at a time when other countries in the Caribbean were closing theirs. Mr Jagdeo’s suggestion that the European Union precipitously and suddenly removed the sugar quota subsidy is just not true; Trinidad, Jamaica, Barbados and St Kitts started equipping themselves for the withdrawal of the subsidy since 2002. GuySuCo’s own 2004-2010 Development plan which we paid Tate I believe, 200,000 Sterling for, stated clearly that the sugar quota was going to be removed. At that point in time this entire project should have been re-evaluated and abandoned, but Mr. Jagdeo stubbornly pushed ahead with it.
Since the IDB would not finance this project Mr. Jagdeo turned to China and India for help; I say Mr. Jagdeo since I understood that it was Mr. Jagdeo himself who traveled to China and made the deal to buy and build the new factory. At all material times I was aware that at the end of his presidency Mr. Jagdeo wanted to leave this factory at Skeldon as a monument to his ego. Well Mr. Editor the monuments we build to ourselves, define us! Mr. Burnham the upper Mazaruni hydro project, Mr. Hoyte the Economic Recovery Programme and Mr. Jagdeo the Skeldon Factory.
The factory project was divided into four contracts SW.1. The actual civil engineering works to build the factory; SW.2. The purchase of the mills; SW.3. The purchase of the boiling house; which for the benefit of your readers, are the huge vessels which boils the cane juice through several stages to produce sugar; and SW.4. The steam power boilers and Electrical co-generation.
The Indian company Walchandnagar gave the lowest bid but they only bid on SW phases 2, 3, & 4 of the project for US$80-85 million, but Walchandnagar which manufactures and builds complete integrated turnkey factories, did not bid on the SW. #1 contract to actually build the factory in Guyana, since apparently they were not comfortable with the Geotechnical study of the site which was GuySuCo’s responsibility to supply, so they did not feel that they had enough information to make an informed bid. Mr. editor for those readers who do not know what a Geotechnical survey is, it is the study of the soil’s load bearing ability etc. which inform the civil engineers as to the type, depth and strength foundation they will require to build this heavy factory on, so Walchandnagar declined from bidding to do the civil engineering part of the project i.e. to build it.
This company has built 80 “turnkey” Sugar factories across the globe and have expanded 80 others to as high as 10,000 tons per 24 hours i.e. bigger than Skeldon. I have two letters from Mr. G.S. Prakash President of Walchandnagar; one dated 22nd May 2002 telling Mr. Paul Hough that the company had one of the best track records in the business and the other dated 28th April 2003 expressing gross discontent with the final award to the Chinese company and I quote him, “we would like to express that we are extremely perturbed and disappointed to note the contents of your message [telling them that they did not get the contract] which we strongly feel is not in conformity with the norms and procedures for deciding such International competitive bids”
Mr. editor I understand that the Chinese company who was finally awarded the contract of between US$18-22 M to actually build the factory, bid about US$115 million to supply parts for SW 2, 3 & 4 which they obtained from other manufacturers in China.
So apparently we paid the Chinese US$115 million for the factory components when in fact Walchandnagar was selling exactly the same thing, but more integrated and therefore more reliable, for US$80-85 million.
Apparently in hind sight the Indian company Walchandnagar’s fears were well founded since I have been advised that the failure of one of the US manufactured Honiron punt dumpers at Skeldon is due to foundation problems. We don’t know what other components are being affected by foundation problems since the corporation is run in such secrecy. What we do know is that this factory has numerous fatal flaws.
I would like to remind your readers that these decisions were made at the highest possible levels of government at the very top in fact, so if Mr. Jagdeo wants to see the person responsible for the failure of this factory all he has to do is look in the mirror. If he wants to see the person responsible for the failure of this entire project all he has to do is look in the mirror. Since 2000 several sugar experts including my own father who was a Director and Mechanical Coordinator for Bookers and GuySuCo for over 40 years told Mr. Jagdeo that this was not a viable project.
Now Mr. Jagdeo is saying and I quote him from your own newspaper “This is a US$200 million facility… unfortunately, it’s not delivering the results we expected it to. They have too many mistakes going on there and I intend to fix it…it has to change. We’re not going to make that sort of investment to have a few people mess it up, So even if it means personally I have to get involved, I will get involved to ensure that it is fixed…that it’s delivering the kind of results that it should deliver so that we can safeguard the sugar industry.”
Mr. Editor in view of what I have written here, who is responsible? And if he is responsible aren’t his statements, now, outrageous? Please Mr. Jagdeo don’t get involved further!
Finally, I am unimpressed by Minister Persaud’s statement in the newspapers, that the Skeldon factory will grind 220,000 tons this year, this is a joke Mr. Editor at 13 tons of cane to make a ton of sugar, Skeldon will achieve a production of only about 17,000 tons of sugar this year!! That was exactly the same production they made with the old mill; but the corporation’s undertaking to the Guyanese people after spending US$200M on this expansion since 2003 was to produce 100,000 tons of sugar at Skeldon by 2010. Mr. Persaud should refrain of speaking on matters beyond his comprehension and competence; he could sleep in the Skeldon factory it will change nothing. And he is playing games with the truth, not one watt of electricity was ever produced at Skeldon for the GPL Grid which was generated from the bagasse of the cane being ground i.e. co-generation, they have been using the Skeldon Wartsilla heavy fuel generators, it is estimated that in the first crop this year G$80M was spent on fuel for those generators so he must state clearly that the co-generation part of the Skeldon expansion still remains a dream.
Because this is now a national disaster of monumental proportions there should be a commission of enquiry into the matter.
Anthony Vieira

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