The company that took over the Simon and Shock International Logging Inc (SSI) forest concession enjoys easier terms than the original holders.
Vaitarna Holdings Private Inc. (VHPI), a subsidiary of Coffee Day Limited of India, last year acquired the State Forest Exploratory Permit (SFEP) for 391,853 hectares of forest originally awarded in 2007 to US-based SSI, after signing a Memorandum of Understanding (MOU) with the Government of Guyana and with the original owners of SSI for a total buy-out in which 100% of the shares were transferred to a new subsidiary, Dark Forest Company (S) Pte Ltd. (DFCPL).
The company plans to ship logs to India to make furniture and also plans to start a sawmilling operation with a proposed total investment of US$18.7M during the first five years, stated as 2010 to 2015.
The original holders had proposed to invest US$26M in three years and offered written guarantees that no logs would be exported. SSI’s proposal had included the building of a new, modern sawmill, which, with the aid of computer imagery, would have been able to scan a log and calculate the number of boards that it would yield. It had hoped to achieve recovery rates upwards of 70 per cent, twice as much as is being achieved in Guyana.
As a direct result of the talks with the government, SSI had offered three written guarantees. Firstly, that it would not export logs from Guyana, since it was a lumber company and not a logging company; secondly, that it would build an advanced milling complex in Linden before any logging activity took place; and thirdly, that if SSI did not build the advanced mill in Linden in a specific time period, all logging concessions granted to SSI by the government would be returned uncut. None of this is contained in Vaitarna’s deal.
GFC Commissioner James Singh told Stabroek News on Sunday that due to the financial crises and other unforeseen factors, SSI was unable to undertake the required exploratory works, or pay the necessary acreage fees and its SFEP was then suspended for non-compliance with the SFEP agreement in 2009.
It is not clear how VHPI was aware that SSI had defaulted but the company then approached the government, offering to pay all outstanding debts of SSI, and do the necessary exploratory works. After due diligence was done, government agreed for the company to take over as the shareholders of SSI, Singh said. The company then paid the outstanding US$254 000 to the GFC and committed to do a forest inventory, a business plan and an Environmental and Social Impact Assessment (ESIA), and submit these to the GFC and the Environmental Protection Agency (EPA) this year.
Last year also, the government accepted an offer of $600 million by VHPI for the 345,961 hectares concession which was originally awarded to Caribbean Resources Limited (CRL). This was after the Timber Sales Agreement (TSA) of the company was terminated and re-possessed by the government in 2010, because of continuous non-compliance with the terms and conditions of the TSA. It is also unclear how VHPI became aware of the intention to repossess CRL’s concession.
The total area now held by VHPI is to 737,814 hectares of forest, around 1.822M acres.
The deals were not made public by the government and it was only after the media asked questions last week following a Times of India report that the GFC issued a statement. Critics have argued that when exploration permits fall into non-compliance like SSI’s they should be submitted to a fresh process rather than allowing the defaulting company to enter a transaction which allows it to recoup its investment and perhaps make a profit. Critics have also argued that oftentimes logging companies promise downstream processing to obtain concessions but this hardly ever materialises or only at a low level; the main objective being the export of logs.
AFC leader Khemraj Ramjattan told Stabroek News that GFC reports, which are required to be submitted to Parliament, have been “scaled down” and are not up to date. “They do not make mention of these things at all,” he said. He questioned the transparency of the deal and the company’s history in forestry. And forestry activist Janette Bulkan has also said that exporting unprocessed logs is incompatible with the National Forest Policy. In a letter in today’s edition of Stabroek News, Bulkan pointed out that no evidence has been given in the public domain that the company has any competence in or experience of conducting natural resource inventories, preparing environmental and social impact assessments, or preparing a forest management plan.
She also raised the issue of the non-competitive award of CRL’s concession, saying that the GFC should have followed Section 11 A 4 of the National Forest Policy 1997 Sub-section (a) which states that ‘Concession licences and permits shall be allocated through a process of advertisement or bidding or tendering,’ but this was not done. Bulkan said that perhaps the GFC was relying on sub-section (d): ‘Concessions shall be transferred to new concessionaires provided that qualifying standards are satisfied.’ But, she pointed out, VHPI has no qualifications or experience of tropical rainforest logging and questioned how it could satisfy GFC standards.
Singh was unavailable for comment yesterday and this newspaper was told that he would not be in the office until Wednesday. Agriculture Minister Robert Persaud did not respond to a query from Stabroek News.
The GFC has said that operational activities have already commenced in the new concession. The company is awaiting environmental authorisation to begin work on its first concession. The Times of India has reported that the government here is in the process of rectifying a non-functional woodcutting and log-sizing unit at the leased forest area and shipping of logs will start once that unit becomes functional.
Singh has defended the deal and said that almost every new company granted a forest concession exports logs in its first three years and it will not negatively impact Guyana’s pact with Norway to reduce emissions from deforestation and forest degradation. The company will have to comply with all of the GFC guidelines for Sustainable Forest Manage-ment and logs can be exported in accordance with the National Forest Policy, he said. “The GFC will however, encourage the company to get involved in local added value activities as soon as is possible,” Singh had added.
