GUYANA: Government scraps US$12.5M Enmore Sugar Packaging Plant

— to build new one at Albion, expand another at Blairmont

Feb 27, 2022  -Kaieteur News – Chief Executive Officer (CEO) of the Guyana Sugar Corporation (GuySuCo), Sasenarine Singh recently revealed that the government is planning to build a new packaging plant at Albion along with the expansion of one at Blairmont for 2022. 

During a recent online interview, Singh said this is all part of a design to be able to sell sugar at a higher value and to ensure the country has enough capacity to produce packaged sugar products for the international market as it opens up. Singh was pleased to announce that the government is already making headway in opening new markets while noting that GuySuCo was able to successfully open a Jamaican market. The CEO said too that last year the government was successful in opening up markets in Grenada and even secured sugar sales for the first time to Germany.       

GUYANA SUGAR IN DEMAND

Singh said, “…So we are opening markets and people love the Guyana sugar…It is important that we continue this programme of getting the revenue and at the same time revising our cost plans. Last year, we cut $175M from headquarter’s budget and that took a lot of resistance but people are now buying into the idea of the long-term sustainability of the industry.”

While the CEO says plans are afoot to increase the nation’s packaging capacity for sugar, fresh questions and concerns have been raised regarding the government’s genuine intention in this regard. Just days after Singh made the foregoing revelation, it was subsequently revealed to the nation that the country’s US$12.5M Enmore Packaging Plant is being leased to a local joint venture group for the purpose of transforming the national asset to a manufacturing hub to support the oil sector.

Many observers held the view that if it is the government’s aim to increase the country’s packaging capability, why would it scrap the operation of the Enmore facility, only to spend millions more then establish another. Observers thought it would be prudent for the government to keep the Enmore packaging facility while adding Albion and Blairmont to the mix. The situation has left many industry analysts perplexed.

With respect to the deal with the joint venture group, Kaieteur News reported last week that it was on February 16, 2022 Guysons K+B Industries Inc. (GKB), a 52 percent Guyanese-owned joint venture, acquired the US$12.5M Enmore Packaging Plant. Over time, the deal entered into between the government and the company will allow the latter to acquire the accompanying 55-acre plot of sugar lands to support its venture.

Last week as well, Guysons K+B Industries released a statement to defend its business record and the intention of its new venture in wake of growing concerns raised in the local press about the deal.

The company was keen to note that its record of investment in Guyana and its people dates back to 1992 when Guysons Engineering was founded in West Ruimveldt, Georgetown, a then economically depressed community. After nearly three decades of growth and prosperity, Guysons shared that it teamed up with the US-based K+B Industries, a leader in manufacturing, engineering and machining in 2020, to ramp up services provided to the oil and gas sector.

It said that a key investment that the joint venture, GKB, committed to make is in the people of the East Bank corridor, plugging US$37.5 million (GY$7.5 billion) to establish the Enmore Manufacturing Plant, a state-of-the-art Oilfield Services facility. The company said a minimum of 50 acres of land is required to effectively deliver OCTG & Premium Accessory Services to the O&G Sector and for this, GKB engaged the Government. GKB said it proposed a site closer to port facilities in Georgetown but saw merit in the “Government’s recommendation of Enmore.”

Importantly, GKB said its lease is for the Enmore packaging facility, not the Sugar Estate, which is approximately 100,000 sq. feet. “To build such a facility would take an estimated 18-24 months, whilst the Enmore Sugar Packaging Plant can be repurposed and become operational, almost immediately, preserving jobs currently held at the Plant, with a guarantee of a minimum of 150 by end of year one and a minimum of 500 by end of year five,” the company stated.

It further noted that the OCTG and Premium Accessory Service that GKB intends to provide is currently outsourced to Trinidad and Tobago, the United States of America, and farther afield. “This initiative would increase commercial activity on the East Coast corridor and tap into considerable foreign exchange earning potential, bringing greater Oil & Gas revenues to Guyana. Significantly, this would be the first time ever that these services are provided in-country,” GKB reasoned, while adding, “The total investment of US$37.5 million (G$7.5 billion) into the East Coast corridor is unmatched.”

GKB further stated that it endeavours to train residents of the East Coast corridor and plans to create and guarantee 150 jobs in the first year with an initial injection of US$7.5 million (GY$1.5 billion).

Within three to five years, GKB said that the guaranteed number will increase to 500 jobs while reiterating that it has committed to rehiring 100 percent of the workers currently employed at the Enmore Packaging Plant. “We will see to it that our expansion uplifts economically-depressed communities of the East Coast corridor with sustainable jobs which will serve as a revitalising lifeline for its youth and laid off sugar workers. GKB has also agreed to strict land development timelines and milestones over the first three years that will be monitored as the phased development occurs,” the company stated.

In a February 17, 2021 report, Kaieteur News had noted that the new manufacturing facility at Enmore will be set up to manufacture and repair tubular goods such as drill pipes, drill covers, etc., needed by oil companies to develop oil fields. GKB will also offer premium threading of the tubular goods, accessory services and Turnkey manufacturing solutions in the country.

As it relates to the arrangement between the government and GKB for the lands and the US$12.5M packaging plant owned by the Guyana Sugar Corporation (GuySuCo), GKB’s Chief Executive Office, Fazil Khan was willing to share some details with this newspaper in an exclusive interview.

Despite negotiations are still ongoing between the two parties, Khan said that an agreement has been made for his company to purchase 25 acres of the land, lease another 25 and also lease the packaging plant on a long-term lease.

Consultant Advisor on the project, Rosh Khan, who spoke with this publication also pointed out that GKB will not be granted all of the lands at one time. He explained that GKB will begin with 25 acres and the packaging plant which spans an area of at least five acres. In order to lease the remaining 25, it will first have to complete all of the commitments it made with Guyana.

GKB’s CEO, Fazil Khan confirmed this and noted too that considerations were also taken to safeguard against a scenario where Exxon can pull out. “You don’t want to invest or buy and then Exxon pulls out of Guyana because it can happen and you can lose,” Khan had said.

Asked if any agreement has been with the government on the purchase and lease price, Khan responded that these are still in the process of being negotiated.
However, the CEO assured that it will be a fair one for both parties and revealed that his company has committed to an overall commitment of US$60M towards the development of the project. Out of this amount, Khan said, more than US$7M has already been expended.

The CEO further highlighted that the lands it is acquiring are “sugar lands”, which will have to be developed in order to become a standard facility.
“We will have to do some land filling, land clearing, probably install some streetlights and so on before we can start up the facility,” explained Khan.

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