Mere two years after commissioning…US$200M Skeldon factory set for major overhaul

Apr 03, 2012 News

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Just two years after launching the country’s most expensive project to date, the government yesterday announced plans to begin a major overhaul of the Skeldon factory.
The US$200M factory, on which Guyana has been pinning its hopes to revive a struggling industry which is the country’s biggest employer, has been plagued with problems.
These problems were there since the sugar factory was commissioned in August 2009, raising questions whether Guyana had received its value for money.
Government has been blaming the “hiccups” on teething problems with accusations that the Chinese contractor had failed to deliver. Even former President Bharrat Jagdeo had promised to “personally” intervene in a project that went wrong in the construction phase.
According to the Guyana Sugar Corporation (GuySuCo) yesterday, it will now be gearing to re-engineer the bagasse feed system, re-design the cane conveyors, drill a new well and replace a five-megawatt alternator to a power engine.
These were all handed over and suppose to have been fully working within months of the August 2009 commissioning, plus or minus a few defects.
It will also be modifying the problematic punt dumpers, build a section of all-weather road, upgrade the drainage and water management system and convert additional lands for mechanized harvesting.
Financing?
While the GuySuCo statement yesterday did not immediately say where the money will be coming from to carry out the “major rehabilitation” as the works were described, last week’s National Budget of $192.8B had earmarked a $4B allocation for the sugar industry.
It is unclear whether that $4B will be used to facilitate these works but Agriculture Minister, Dr. Leslie Ramsammy, is yesterday quoted as telling the government’s NCN that GuySuCo faced a deficit of $2M last year. To meet the 265,000 tonnes of sugar target for this year, it is more than likely much more than the allotted $4B would be needed, NCN reported.
According to GuySuCo yesterday, in keeping with a plan approved by its Board of Directors, GuySuCo has begun to implement plans to undertake several major rehabilitation projects at Skeldon Estate during the upcoming out of crop period -June 2012 to August 2012- as part of its efforts to “turn the industry around”.
“Working wíth reputable international engineering experts and technical professionals in the area of diffusion technology together with agricultural specialists, GuySuCo identified the major factors that are preventing the estate from reaching its full potential and design capacity.
As such, it will undertake several major projects in both the factory and cultivation at Skeldon Estate,” the Corporation said in the statement.
GuySuCo disclosed that in an effort to enhance the cooperation and communication among the major stakeholders in the industry, it’s Board, management and the unions (GAWU and NAACIE) and workers’ representatives recently met and discussed a number of issues including bolstering production and the rehabilitation projects at Skeldon estate.
Production increase
“GuySuCo anticipates that additional projects will be undertaken during 2013 resulting in a significant increase of production.”
The construction of the Skeldon factory was part of a modernisation plan by GuySuCo that involved expanded cane cultivations, the establishment of a refinery, and the co-generation of electricity for the national grid.
Guyana had lost the preferential prices offered by its biggest customer in Europe, losing around $10B annually in revenues.
In 2008, the sugar industry directly sustained some 18,000 jobs. Sugar exports account for as much as 20 percent of the country’s annual revenue. Therefore, the survival of the industry is seen as crucial to the country’s economic and social stability.
The new factory was intended to increase national production to more than 450,000 tonnes. It was to be the most modern sugar factory in the Caribbean.
The factory also uses bagasse (the waste of the sugar cane) as fuel part of the co-generation power section of the factory that would have provided most of the daily base load power requirement for Berbice.
The factory was constructed with a combination of self-generated funds and loans from the Caribbean Development Bank, the People’s Republic of China and the Government of Guyana. The Project Engineer was Booker Tate, UK Ltd and the Contractor was CNTIC Ltd, the Chinese company.
Government fired Booker Tate saying it failed to supervise the construction of the factory properly. Several millions of US dollars were reportedly withheld.
The Chinese contractor, CNTIC was supposed to fix several defects plaguing the factory and while some were fixed, many of them were still outstanding. That amount is unclear.
It is also unclear how many still have to be fixed as the defects liability period- the time in which the contractor has to fix problems- has already elapsed.
GuySuCo’s officials remained unavailable for comments yesterday.
Skeldon factory has been failing to meet its production targets since the commissioning two and a half years ago.

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