Skeldon – the True Picture

The US110M Skeldon Factory

Finance Minister Dr Ashni Singh in his budget presentation on February 09, 2009 stated that “the Skeldon factory is now expected to be fully operational by the middle of the year…” No doubt to the Minister’s surprise as at March 07, 2009 the new factory is already functional. In the first two (2) weeks of March it successfully produced 549 tonnes of sugar. The lack of an adequate cane supply and the intervening rains have restricted higher sugar production.

The defects which affected the punt dumper, the shredder, the diffuser, the processing house, the dewatering mills and the baggasse scratcher, etc have been remedied during February, 2009 and hence the successful operation of the factory. Some further fine tuning is being done to processing areas. The adjustments are undertaken as the processing of sugar takes place.

As the operation of the new factory is becoming perfected and its throughput increases towards its maximum production level, certain lack of adequate cane supply will restrict severely the factory’s continuous operation. The canes available for harvest in the current crop inclusive of canes left unreaped last year at Skeldon total about 3,300 hectares.

By the end of April, the new factory is expected to grind the entire crop’s canes inclusive of the un-harvested canes from last year. The current crop is, therefore, will end earlier than the scheduled date of the closure of the crop – May 08, 2009.

The factory also is geared to export power to the National Grid thus providing additional revenues to the industry. The utilization of baggase to generate power reduces Guyana’s reliance on fossil fuels and the country will be qualified for carbon credits under the World Bank Community Development Carbon Fund. When there is enough cane supply to the factory expectedly in 2012 some eleven (11) months of the electricity supply will be provided by the two turbines utilizing baggase as fuel.

To meet the demands of the new factory the Estate’s cultivation is being doubled while the new and existing farmers are to expand their cultivation to 4,165 hectares supplying almost a third of the canes required for the new factory.

The US$110M factory commenced construction during September, 2005 and should have been commissioned last year; however, the deadline was not met. Since February, 2009 remedial work has been proceeding apace by the Chinese contactor in conjunction with Guysuco’s engineer. Besides the turbines, there are three (3) generating sets which have the capacity of producing twenty (20) megawatts of electricity. The generating sets are to be used when baggase is not available to power the turbines. At the end of 2008, 37,758.9 megawatts were exported to the National Grid from the turbines and generators.

In order to produce the targeted 110,000 tonnes of sugar the factory requires 1.2M tonnes of cane, hence necessitated significant land expansion to satisfy the demand. Before the project commenced the Estate’s cultivation covered 4,955 hectares and the farmers, 314 hectares. As at the end of last year, Guysuco had under cultivation 7,033 hectares and farmers 908 hectares.

This followed them securing loans totaling about G$2B from the Guyana Bank for Trade and Industry after the Bank received a written commitment from Guysuco, that the Corporation will purchase all the canes from farmers. Since the loans have become available farmers’ field expansion has gained significant momentum. It is expected by year end that the farmers and the estate there will be 10,098 hectares under cultivation, in 2010, 12,625 hectares and in 2011, 14,120 hectares. In another thirty four (34) months adequate canes will be under cultivation to supply the new factory to produce 110,000 tonnes per annum. In other words, the objective of 14,120 hectares under cane cultivation is expected to be achieved by December 31, 2011. The cane production of 1.2M tonnes will be achieved in 2012 from the 14,120 hectares under cane as at December 31, 2011 thereby allowing the targeted 110,000 tonnes of sugar to be produced in 2012.