GUYSUCO, Chinese firm sign US$110M contract
Sugar modernisation project to start September
By Jaime Hall
July 4, 2004
THE Guyana Sugar Corporation (GUYSUCO) and the China National Technology Import and Export Corporation (CHTIC) have entered into a US$110M contract to build a sugar factory and cogeneration plant at Skeldon, Corentyne, Berbice.
The signing represents one of the steps towards modernising the local sugar industry to cushion the impact of the increasingly difficult conditions facing the African, Caribbean and Pacific (ACP) countries.
Work on the factory is due to begin in September and is expected to end in thirteen months, Chairman of the Guyana Sugar Corporation (GUYSUCO) Board of Directors, Mr. Ronald Alli said during the handing over yesterday of the contract documents at Herdmanston House, Queenstown Georgetown.
Alli and CHTIC Vice President, Mr. Zhang Goudong signed the contract on June 22 in Beijing. The contract provides for the construction of the new factory, distillery and refinery.
Chairman of the GUYSUCO Board of Directors Mr. Ronald Alli (left) hands over a copy of the contract document to Chief Executive Officer of GUYSUCO, Mr. Michael Boast in the presence of China's Ambassador to Guyana Mr. Song Tao.
Funding for the project was provided by the World Bank, the International Monetary Fund (IMF) and the Exim Bank of China. GUYSUCO will contribute self-generated funds and revenue from land sales.
Preparatory infrastructure works for the factory have been completed and additional acreage of land for sugar cane cultivation is progressing satisfactorily.
The project will also provide for increased private sector involvement with 30 per cent of the factory's cane requirement coming from private farmers.
Financial support in the sum of US$25M has been received from the Caribbean Development Bank (CDB) for the agriculture extension of Skeldon Estate to provide adequate supplies of cane.
With all this happening, Alli said the stage is now set for heightened industrial agricultural activity in Berbice as the construction gets underway. About 400 to 500 new jobs would be created during the process, he said.
Although the commissioning of the plant is due for January 2007, power generation will, however, commence sooner through the inclusion of a 10-mega watts diesel plant that will be functional in 22 months. Thereafter, the Skeldon factory will produce 30 megawatts from baggasse of which GUYSUCO will export 10 megawatts of electricity to the national grid for continuous power to New Amsterdam and Corriverton.
The Skeldon factory is one component of the industry's strategic plan, which aims at improving GUYSUCO's productivity and reducing costs to ensure stability and viability of the industry.
The project is a major undertaking for Guyana and a significant development in the sugar industry in the Caribbean.
Guyana's sugar industry continues to be the driving force of the nation's economy and has faced and survived a many obstacles and challenges in the past.
"The recent announcements by the European Union on reforming its sugar regime and effectively lowering the price of sugar paid to its traditional suppliers from the ACP countries cannot be taken lightly and we certainly are not prepared to accept such an act of `bad faith' and a departure from the Cotonou Agreement at this time," Alli said.
Commenting on the EU proposal, Alli said if it is accepted, that could mean a reduction in preferences from 20 to 37 per cent for ACP countries. He noted that the impact will be felt, since some US$35M in revenue will be lost every year. But the Skeldon project was conceived to cushion the impact of loss in preferences, he said.
Alli said the factory could be the most modern in the western hemisphere that would create immense benefits for Guyana. It would generate increased economic activity and opportunities for human development to the people of Berbice.
Sugar contributes 16 per cent of Guyana's Gross Domestic Products, one fifth of the foreign exchange earnings. The industry employs 18,000 people directly and another 10,000-15,000 indirectly.
China's Ambassador to Guyana Mr. Song Tao said the project is a milestone in the economic relations with Guyana. He said China is willing to contribute to the country's economic development and share its expertise in sugar production. He noted that the undertaking of CNTIC for the project is fully supported by the Government of China.