Vaitarna now exporting chopped lumber

Aug 03, 2015 News

GFC Commissioner says this is “some level of value added operations”

By: Kiana Wilburg

It has been over three years since the Indian logging company Vaitarna Holding Private Incorporated (VHPI), has been promising faithfully to establish a wood processing facility in Guyana. In fact, it had told the media that it’s sawmill would be in full swing by the first quarter of this year.
Commissioner of the Guyana Forestry Commission (GFC), James Singh said that the company recently gave him an update on where they stood in that regard. He said that he was told by Vaitarna that it has started “some level of adding value” to Guyana’s prime logs.
Singh said, however, that Vaitarna which is part of the group that owns the popular Coffee Day Inc. franchises in India, is still experiencing some difficulties. The GFC Commissioner disclosed that the company’s value added operations are not as considerable as it desires at this point as it is awaiting some equipment to reach local shores so as to enhance its operations.
He added, “They have already started some level of processing, but they told us that they are awaiting some additional equipment which has been delayed for various reasons and they have provided us with justifications for the delay.”

GFC Commissioner James Singh

Asked to explain the “level of processing” or “adding value” to the logs which was started by the company, Singh said that “Vaitarna has commenced the conversion of logs to milled lumber,” but he explained that he would go into details on this during another interview. Milled lumber refers to wood which is already cut to any marketable size while a value-added wood product is as a result of taking the raw materials and reproducing something that is functional. This can be in the form of furniture. In short, the value added, process ensures that the worth of the final product is more that the original raw materials.
The total area held by Coffee Day is 737,814 hectares of forest. In 2010, the company acquired the State Forest Exploratory Permit for 391,853 hectares of forest. This was initially awarded in 2007 to US-based Simon and Shock International Logging Incorporated (SSILI), after buying out SSILI. The company has since been granted a Timber Sales Agreement for this concession and has been harvesting logs.
As for its Chinese contemporary, BaiShanLin Forest Development Inc. it has been over ten years since this company has neglected its promise of establishing a wood processing facility. It had given conflicting reasons in the past to justify the delay. However, Singh recently revealed that the company indicated to him that the holdup is as a result of “financial difficulties.”
“They told us that they have been experiencing some financial difficulties in the sense that they were unable to meet some benchmarks for certain lending agencies…We met with them and they had some concerns. They indicated to us that they met with some Government officials and are expected to submit a revised programme in relation to the facility for review.”
He had said, too, that a team from the China Development Bank also accompanied the Chinese company to the meeting. The Commissioner said that he told BaiShanLin to make the wood processing facility their priority.
Singh had said that the company promised that once the “financial difficulties” are over, it will also submit the revised programme on the facility to the Commission.
It was only last week that Presidential Advisor on Sustainable Development, Dr. Clive Thomas blasted the two logging companies for what he deemed to be unethical and unacceptable behaviour.
He will be recommending to the David Granger-led administration for some of their concessions to be taken away.
“Guyana cannot continue to be giving out hundreds of millions of dollars worth in these tax breaks or concessions and we aren’t benefitting from value added operations. If companies make a commitment to do so then the ethical thing to do is to deliver what was promised. If not, their concessions should be taken away. They need to face sanctions of that nature or probably something stronger. BaiShanLin and Vaitarna have become logging giants in this country and by its own actions, it is clear that we should review all of their concessions. I would be advising the President of taking such actions. My position on this is clear; they need to cut off some of their benefits,” the economist said.
“This is obviously not part of how one promotes the suitability of an economy and an industry and we cannot continue to go this route. Allowing this sort of behaviour to continue sends a dangerous message to other potential investors and local companies. What has the Guyana Forestry Commission done regarding such infractions? Is this not important?
“We really need to change the landscape of the way business is done in the logging industry and eliminate this kind of slackness we allow these companies to get away with. This is not about whether you are foreign or not. At the end of the day it is what is right for the development of the country and quite frankly these two companies have just been taking and taking and not fulfilling their promises of considerable value added operations. It has been years now, so what can possibly be their excuse? They need to face serious sanctions.”
Following his statements, Minister of Governance, Raphael Trotman, explained on Wednesday last that after meeting with the companies, they promised to get the wood processing facilities up and running within some months. Trotman noted that Vaitarna and BaiShanLin will not escape sanctions if they fail to get their promised value added facilities started. He said that the termination of their contracts could be one of the sanctions.