Union President Komal Chand said setbacks at the Skeldon factory have been persistent enough for one to reasonably call for an inquiry into what is “going on there”. He believes the operational problems have been ongoing for too long.
“Everything is not fine at Skeldon, far from it; they need to have Skeldon put in order…,” Chand, president of the Guyana Agricultural and General Workers (GAWU) said last week while union members were engaging in industrial action. Sugar workers on the picket line were also calling for an investigation into what is happening at GuySuCo’s flagship factory.
Chand not only endorsed the workers’ call for an investigation, but called on the sugar corporation to say what is happening with the blueprint projections because “we are far off”. He said the fact that the factory is not performing requires some sort of inquiry, stressing that in 2010 the industry should have been producing over 300,000 tonnes of sugar.
GuySuCo’s Chief Executive Officer Paul Bhim rejected the calls saying he has no idea what they mean by “inquiry”. He said some of the problems at Skeldon are known such as the non-functional boiler and occasional issues with the punt dumpers, adding that there are other defects which are consistently being addressed. But he also pointed out that the factory is still to undergo a key test which is not likely until next year.
“It is not fully tested, it is still settling down…,” Bhim said of the factory, adding that problems would occur from time to time. The final round of testing is not possible with one of the boilers currently out of operation; the Chinese firm, CNTIC which built the factory is still on the ground at Skeldon waiting to run the final test some time in 2011.
Bhim said CNTIC identified a string of defects within the last year and was able to significantly reduce the number, which was as high as 120 at one time; currently there are only about four major defects. He would not expand on what those were, but noted that the firm has given a December deadline to remedy the problems.
Though government had previously raised the issue of damages Bhim told
Stabroek News last week that the contract has a retention clause which makes provision for the withholding of funds until the project is completed and according to him, “it is not yet completed”. He said the firm will have to hand over a fully functional factory and wait a year after the handover date before the remaining funds would be disbursed; but this also depends on how well the factory is working.
Chand, in explaining why an inquiry would be useful, said that earlier questions have been asked about the technology at Skeldon and whether a proper analysis was done on the firm which was contracted. In addition, he said the factory is new and a lot of money had been invested in the project only to have “ongoing issues and a dismal performance so far”.
What happened to
field expansion?
Chand said GuySuCo and the private cane farmers are behind time in field expansion which, “should have happened simultaneously with the factory opening”.
The corporation had initially projected an adequate cane supply in 2011, but the required 1.2 million tonnes of cane for the Skeldon factory to grind at capacity would not be available until 2012. Chand opined that the hierarchy at the corporation needs to have a more hands on approach at Skeldon and ensure that “things are put right”. He reiterated that it is a big investment, emphasizing that without Skeldon the future of the other estates is jeopardised.
He continued that Skeldon is currently grinding around 210 tonnes per hour with a capacity of 350 tonnes per hour. Chand said a poor supply of cane and the operational problems at the factory are contributing to its dismal performance.
He said also that the corporation is still using too much cane to produce a ton of sugar; currently it is around 14 tonnes of cane to a single ton of sugar cane. Chand said the quality of the cane often determines how much is ground for a single ton.
Since the start of the second crop no major problems were reported at the factory and GuySuCo was able to meet its target for three consecutive weeks; but this was before two days of industrial action across the estates which the corporation deemed crippling to its operations.
Bhim said the corporation would be alarmed if production fell below 233,000 tonnes this year because that was close to what the industry recorded with last year. According to him GuySuCo has no intention of finishing the crop with numbers that low.
The weather is a major issue right now, he said, adding that they would be forced to take the crop well into December to finish strong.
A production target of 280,000 tonnes had been set for this year, but the industry recorded a shortfall during the first crop with output being recorded at 81,864 tonnes. It was later revised to 264,000 tonnes which now also appears challenging, according to Bhim.
Chand too believes that the current target would be difficult to make because of the weather and other issues. He said there is cane in the ground to produce the required target right now, but that the question is whether they will be able to reap the cane in time.
“…In 2010 we should have been making over 300,000 tonnes, we have the workforce, a brand new factory, the land, suitable conditions, but there has been too much mismanagement over the last years,” Chand said. He said that production levels under 300,000 tonnes is not something to be happy about.
Further, he said that high productivity levels over the past three years would have eased the financial burdens facing the industry and alleviated some of the blows felt after the European Union price cuts. With the current production, he said GuySuCo could only meet contractual obligations and “miss out on world market prices which are favourable right now”.
The Skeldon factory was a turnkey project between government and the China National Technology Import and the Export Corporation (CNTIC). It was to be handed over in October 2008, one in a string of missed deadlines. Additionally, the new factory was beset by mechanical problems during the initial operating period.
Last year Tate and Lyle Sugars detailed the problems at the factory in a report of April 2009. The report was completed after a visit to the factory and it underlined problems with the diffuser in addition to issues with the bagasse ploughs and to a lesser extent, the punt dumper; it also pointed out other issues.