Logging scandal…GFC defends delays in processing facilities

Aug 19, 2014 News

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– says companies find it financially better to export
– refers Bai Shan Lin duty free concession questions to GRA

The Guyana Forestry Commission (GFC) has defended its handling of logging activities in the country by saying that all is above board and nothing is wrong.

During a testy press conference at its Kingston headquarters yesterday, which  was peppered with questions regarding the operations of foreign investors, the regulatory body in defence of the delays to invest in a timely manner in value-added processing, also said that it may be a case where producers are finding it more economical to export.
Along with his senior management officials, GFC’s head, Commissioner James Singh also criticized reporting by both independently-owned Kaieteur News and Stabroek News in their coverage of the forestry sector in recent weeks.
Two companies especially – Chinese-owned Bai Shan Lin and Indian-controlled Vaitarna Holdings Private Inc. – came under intense scrutiny recently amidst reports of their logging activities. The reports had zeroed in on the absence of value-added processing which both companies have promised but have not moved into.
As a matter of fact, Bai Shan Lin has shipped in hundreds of heavy vehicles mainly used for logging purposes.
According to Commissioner Singh, harvesting of logs is way below the annual 1.6M cubic meters that is required. As a matter of fact, he said, the sector is currently operating just over a 30 per cent level, so there can be no questions of over-harvesting of logs, as is being reported.
Regarding the delays of moving to what is known as downstream processing that would bring more monies to the treasury and create more local jobs, the Commissioner in his presentation said that because of the difficulty in processing the lesser known or used species of wood in which especially Bai Shan Lin is concentrating on, the companies are finding it more profitable to export them as logs.
This might be a hard pill to swallow for critics who said that foreign investors have come into Guyana specifically promising the plugging of millions into processing facilities like sawmills and other value-added services. They would have had to be screened and due diligence performed before being granted permission to proceed.
“The cost of appropriate skills/machinery to process these species; and their limited abundance in the forest, continue to make it currently uneconomical to process these species locally,” the GFC said in its presentation.
Ban on log exports
The Commissioner also said that in 2009, it was proposed that a complete ban be made on log exports, but stakeholders opted for a graduated yearly increase in the export commission which now stands at 17 per cent for prime species and which is expected to rise again.
Regarding reports over the weekend that thousands of logs were burnt at Bai Shan Lin’s Kwebanna, Region One concession, the GFC official said an investigation was launched after the company complained earlier this year that someone had torched them. As a matter of fact, the GFC head says, the harvesting of those logs took place before Bai Shan Lin entered into a joint venture arrangement with Kwebanna, a concession in Essequibo under the control of the Mazaharally company.
In defending the photos carried recently in Kaieteur News in the East Upper Berbice area at Kwakwani showing thousands of log piles, Singh said that several other concessionaires with forest holdings have also been storing their harvested timber in that particular area, in addition to Bai Shan Lin.
Regarding the logging activities of Vaitarna, the Commissioner made it clear that it cannot be expected that the firm would immediately move into large-scale value-added activities as the process takes a rather reasonable time -as long as two years.
Asked to explain then how Chinese-owned, Jialing Forestry Industry, could have been in Guyana for over a decade logging without being compelled to building its processing facilities, Singh said that both Vaitarna and that company have been summoned before GFC which had even contemplated taking back the forestry concessions.
Vaitarna last week announced that it was moving to set up its portable sawmill facilities by this year-end.
GFC admitted yesterday that foreign companies are also being allowed to compete locally, selling some of its cut logs to sawmills and even to Barama Company Limited, an entity that produces plywood from the Baramalli wood.
Asked to explain logs that were tagged by GFC but have been at Vaitarna’s Wineperu operations at Bartica, Region Seven for some time, Deputy Commissioner, Tasreef Khan explained that Government has already collected its royalties but is working with the company to ensure that the wood is either processed or sold. The reason for the delay was because of difficulties in the market, according to him.
Difficult to Repossess
The GFC officials also noted that as regulators, it just cannot take decisions to repossess forestry concessions because of the implications on workers and others. Indeed, locally, a number of loggers are also guilty of not utilizing their concessions according to regulations which mandate them to cut above a certain amount annually.
Asked how Bai Shan Lin was allowed to bring in hundreds of heavy duty vehicles, like trucks, excavators, loaders and road making equipment, before its business plans have been approved, Singh referred this newspaper to the Guyana Revenue Authority.
GFC stressed that real time monitoring, its 39 forest station across the country, bar code scanning to track logs, and independent audits have all been playing a role in ensuring that its system of forest monitoring is one of the most robust in the world.
“Satellite imagery of the entire country at 5m (15 feet above the earth) resolution showed that deforestation/ forest degradation due to forestry activities was 353 hectares out of a total of 16,618 hectares.”
This is less than 0.01 per cent and is in keeping with requirements, the official said.
The debate over logging activities has been raging, especially over the benefits that Guyana is deriving from logging activities, moreso when the harvesting and subsequent use of local infrastructure like roads being measured against the investments being made.

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