Barama committed to Guyana, has nothing to hide

Aug 02, 2015 News

…rising energy costs, lack of workers hamper operations

As Guyana looks to tighten up on foreign direct investments and to review measures to ensure that the country benefits, one company is insisting that it has done its part.
But the challenges are growing. One of the biggest problems, ironically enough, is the difficulty of Barama Company Limited, a Malaysian-owned company, to acquire skilled workers and raw materials.
The plywood manufacturer’s assurances that it is here for the long haul would come as criticisms continue to abound over the stewardship of the forestry sector.

Barama’s Manager, Mohindra Chand speaking about his company’s operations to Kaieteur News reporter, Sunita Samaroo.

While consecutive Governments have insisted that Guyana’s forest production remains below annual limits, one thing remains clear-— logging and other activities are on the increase. The big question had been- what is Guyana getting from it?
In 2014, total production of logs, primary lumber, long wood, fuel wood and split wood, was at 527,000 m3 as compared with 437, 000 m3 in 2013, an increase of 21 per cent in production. In terms of export, US$54 million was exported compared with US$39 million in 2013.
Barama, which came here in 1991 and which claims to have invested over $43B, was one of several that have been under fire.
It is unfair – the criticisms that have come, the company says.
The company recently agreed to answer questions from Kaieteur News about its activities in Guyana, making it clear that it has towed the line and has remained a responsible corporate citizen.
Officials facilitated a recent visit and tour of its Buck Hall operations, located along the Essequibo River, by this newspaper. It even allowed reporters to read its investment agreement, saying there is nothing to hide.
It came here in 1991 under former President Desmond Hoyte’s administration and along with the Guyana Telephone and Telegraph Company, now considers itself as one of the longest foreign direct investments in the country.
Its factory at Land of Canaan has been supplying plywood, critical to home construction, to the local market and for export.
Checks and Balances
Of course, says Head of Corporate Affairs and Forest Planning, Mohindra Chand, a large presence of resident officers of the regulators, Guyana Forestry Commission, ensures that the operations are in keeping with requirements.
Chand said that despite its concessions, being around 1.6M hectares, the largest forestry concession in the country, its available forest is just about 1.1M hectares, taking into account the rivers and other areas. It is barred from carrying out activities as part of the environmental safeguards.

Plywood operations at Barama.

Overhead view of the Buckhall operations, Region Three.

Of this, about 100,000 hectares are expected to be excised for Amerindian reservations undergoing extensions.
With 800 Guyanese representing 85 per cent of the workforce, Barama said its forest management practice was developed by the respected Edinburgh Centre for Tropical Forests. Its operations have been certified too…it has the largest single block of tropical forest in the world that is under verified legal origin and is now pursuing verified legal compliance, one of the key requirements when it comes to timber products.
Annually, Barama said it contributes about $400M in taxes, royalties and other fees. About $1.6B annually is paid out for local service and other goods providers.
At least two communities- Port Kaituma in Region One and Buckhall in Region Three have benefitted significantly.
According to Chand, one of the major benefits from Barama is its thrust not to rely on the traditional species like greenheart and purpleheart. “As a matter of fact we target 127 species, with an average 60 species available.”
Between 1993 and 2014, some 2.4M cubic metres of logs was produced with approximately 60 percent used in the company’s plywood and lumber production based on species suitability.
“Barama’s activities have not only been in log harvesting. It has spent some $8.5B to date to construct over 3,000 kilometers of roads, which are in use by others. Between 1992 and 2013, to tell you we are responsible, we have harvested over 70 percent of the allowable area according to 40-years cycle. We have also been involved in other activities like cultural diversity, education, bursary, community projects, medical facilities, emergency response, sports…”
But Barama is complaining of hardships. It takes as long as 12 months, sometimes, from the time of the forest inventory to delivery for customers to receive their orders, because of logistical and other factors. Its recovery rates because of poor raw material supply are just averaging at about fifty percent.
To compound problems, the company is having difficulty to find workers, especially those willing to operate in the forest concessions.
With energy costs remaining high, operational costs have been mounting with fuel acquisition a major worry.
No Duty Free
The company said it is not benefitting from special attention.
“We are not benefitting now from any duty free concessions. Because of the heavy presence of miners and others on our roadways, we are also seeing our maintenance costs rising. It all impacts at the end of the day on the bottomline.”
On that export end, the lack of containers, a shallow Demerara River leading to the wharfs and bureaucratic processing have all contributed to constraints.
“As you know, Guyana has a rainy season too. It has significantly impacted our operations. It will affect operations as there can be no movement on the roads when the rain falls. We have also been facing delays in transferring monies from Guyana.”
Another major factor hampering productivity for Barama is poor forest yields.
“It is a fact that a clump of a specific tree species will not be growing in one place for most species. We may find a few in a hectare. So taking the equipment there, taking the trees down, it takes time,” the Manager said.
“We are averaging 6-7 m3/hectare. With natural defects, high species diversity and inconsistent distribution, you can see we remain highly challenged. On top of that, we are facing competition from challenges internationally – from Suriname, Brazil, China, USA, India and Africa. But we are doing our part.”