Securing the necessary financing for this project from China's Exim Bank could take another two months and be wrapped up by the end of June. Boast expects the new factory to be up and running by the first crop of 2007, well behind the original schedule of second crop 2005.

"We are very excited (by the international agencies clearance) as we (Guysuco) kind of worked on this project for a couple of years. At least we can now go ahead and move the project forward," says Boast adding that, "Co-generation is great for this country...it is the right thing for Guyana to do as it is environmentally very friendly and will save a lot of foreign exchange. We will be applying for carbon credits (under Kyoto)...it will not be a great big chunk of money but it will be something."

The IMF/World Bank clearance for this project means the advanced negotiations between Guysuco and CNTC Trading of China on the raw sugar factory will be modified in time for changes to be made on the size of the boilers and the power generating equipment.

The original target for completion of the new factory had been the second crop 2005 and this was shifted to first crop 2006 because of delays associated with the project when the IMF refused a waiver to allow Guysuco to borrow on commercial terms. The target is now pushed to first crop 2007 mainly as a result of the need to ensure cost savings by integrating a co-generation facility with the new factory designs. The corporation has had to do a feasibility study on the co-generation plant and this was presented to both the Fund and the Bank. Boast says the Bank felt the project was very good.

Altering the designs for the new factory will not take very long as most of the negotiations on the factory are already completed. Guysuco's negotiating team is expected to head for China shortly to conclude negotiations and Boast is upbeat about the signing of a contract with CNTC for the Skeldon project later this year.

Getting clearance from the international institutions for the co-generation project has been a key milestone for Guysuco given that it would have cost the corporation much more to later add a co-generation plant. These two institutions also have to clear the investment in the sugar refinery but because the refinery can be added-on later, it was not deemed the number one priority before construction of the new factory. Work on a feasibility study for the refinery will start soon.

The co-generation facility will have 30 megawatts of installed capacity, five megawatts of which will be standby power. The corporation will use about 15 megawatts for its own operation and will export 10 megawatts to the Berbice grid. Guysuco will have to arrive at a power purchase agreement with the Guyana Power and Light (GPL) for the sale of additional power.

GPL's plans for Berbice have been tempered with the knowledge that it will be sourcing electricity from Guysuco.

Boast says the co-generation project will be competitive to a diesel system. Maintenance costs will be low and the plant will have an estimated life of about 30 years as against high-speed diesel sets, which have a life of between 10 to 15 years. Boast, however, says the corporation may have to resort to use fossil fuel for some months of the year, as it may not have adequate stockpiles of bagasse. Additionally, the corporation will need to use fossil fuel to start up the plant. But the use of fossil fuel will be kept to a minimum.

The co-generation project is expected to cost more than the earlier estimate of US$16M. The cost of the refinery on the other hand would be in the order of US$24M. These costs will be finalised in negotiations with CNTC.

China's Exim Bank is willing to finance both the co-generation project and the refinery and would have to be formally approached once negotiations with CNTC are sealed.

Guysuco expects that CNTC will take a few months to execute detailed designs for the project while financing is settled. Boast expects a factory 28 months down the line if there are no serious slippages in the programme.

The feasibility study on the refinery will also have to be presented to the Fund/Bank for clearance. Guysuco, with the threat to preferential markets, sees its future tied to regional markets demanding refined sugar, hence the need for a refinery.

The new factory at Skeldon is vital for Guysuco's survival as it seeks to bring down its cost of production over time to remain viable. The new factory will have a capacity for 120,000 tonnes of sugar and its cost of production is expected to be around US nine cents per pound against the industry average of US 17 cents.

The World Bank has already approved US$21M for the modernisation project and the Caribbean Development Bank has approved US$26M. Guysuco is expected to raise US$35M from land sales and US$28M from retained earnings for the project. The rest of the financing requirements will have to be sourced at concessional terms and China's Exim Bank is the key.