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CJIA expansion company importing Suriname’s stone because Guyana’s too expensive

Grassalco, a Surinamese company, loading crushed stone on a barge.

Grassalco, a Surinamese company, loading crushed stone on a barge.

The Minister of Public Infrastructure, David Patterson said the Chinese company that is expanding the Cheddi Jagan International Airport (CJIA) was willing to buy the stone locally, but the price was too high and so it had to turn to Suriname.

In a response through a ministry spokeswoman, Patterson explained that the Surinamese company, Grassalco, submitted quotations for the supply and delivery of the stone landed at the Timehri docks at US$28 per tonne. He said local suppliers quoted prices ranging from US$36 to US$40 per tonne. “Those costs, he explained, were ex-factory or ex-depot costs at Kingston or East Bank Demerara and so “an increase would be added to transport the stone to the site.”

Grassalco and Zhong Da International Engineering Company earlier this month agreed to deliver 300,000 tonnes of crushed stone valued at US$7.5 million in partnership to the client, CHEC, for CJIA’s expansion. The delivery would take place over the next 12 months.

Chief Executive Officer and Director of Toolsie Persaud Quarries Inc; Rajesh Persaud on Friday told Demerara Waves Online News that he could not say what is the price for the stone that he has to offer because China Harbour Engineering (CHEC) has not provided the specification and the volume of stone. “Prices are also dependent on volume purchased,” he said.

Persaud was confident that local stone producers could supply stone at the same price as Grassalco. “I am sure local producers can come to a suitable price based on volume purchased. Off, course large volume purchased, you get a better price,” he said.

Toolsie Persaud Quarries Inc; he said, has been supplying CHEC with stone but he was unsure on which project it is being used. He did not deny that quotations of between US$36 and US$40 per tonne were provided to government.

Asked why the price of stone produced in Guyana was higher, he explained that the stone here is harder to mine and is of a higher quality. “It has far higher engineering qualities. It is harder rock; the geology of the rock is a lot better than the rock that you can get in Suriname and even throughout the Caribbean. The geology of our rock is superior and it is a more expensive to crush,” he said.

The Toolsie Persaud official welcomes plans by the Public Infrastructure Minister and the Minister of Business, Dominic Gaskin to ascertain why the prices quoted were higher although locally produced.  “I feel that the stone for that airport project should be sourced out of Guyana whereby the Guyanese people will benefit from it,” the businessman added.

Patterson said “electricity costs do not factor into stone production at the quarries.”

Grassalco’s Chief Executive Officer, Sergio Akiemboto has said that deal would pave the way for the miningcompany to secure more deals in the region and Grassalco would eventually play a major role in the economic development in the Caribbean as a supplier of crushed stone.

So far the Guyana deal is the largest contract the state-owned company has signed with a foreign contractor. However this is not the first regional contract for Grassalco. Several months earlier the company supplied boulders to Barbados for the construction of a sea wall in the Sandals hotel construction project.

  • {1} Because Guyanese businessmen are poor at production costing , inefficient record keeping and good at the deliberate ”fudging” of books. Calculating unit cost of production,and adding acceptable ”mark up”is not their forte and therefore they were incapable of submitting realistic price for the stone ”landed at the Timehri”.
    {2} They misguidedly thought that they were going to make a ”killing” ,not figuring that other competitive bids were available.
    Most of our entrepreneurs suffer from a dearth of theoretical Business education……in fact some of them boldly diminish the contributions of such skills to their business…..no wonder they are left to remain inefficient and stagnated.

    • rudeo

      You may have a point there

    • Lancelot Brassington

      Could well be true. Another factor is that while Guyana’s stone may be of a higher quality Suriname’s stone is apparently adequate as far as the design goes. Going beyond design requirements always costs more and serves no useful purpose. Guyanese suppliers may have to take another look at their pricing.In the final analysis business is not about sentiments.

    • Col123

      Too much of a generalization there B. You are speculating that your points do not exist in other countries!..I happen to know better. In a young “developing”country, the payor source should have challenged the unit cost in the bids and negotiate in an effort to support local production. Even prostitutes negotiate… well, I don’t know that for a fact!

    • Emile_Mervin

      Burch, you’re looking at a politically-based business exercise and fail to see this is an extension of the Chinese continued discrimination against Guyanese.

      As with Guyanese stone suppliers, same thing happened with the Marriott, where Chinese labor was imported to the disadvantage of Guyanese labor. What would it have cost the Chinese to even procure some of the stones locally?

      And even though this CJIA project is financed via a loan from China, Guyanese still have to repay the loan, so why didn’t the government insist that some of the stones be bought locally?

      The Chinese look out for themselves, but not so with Guyanese. The Chinese continue to screw with Guyanese with any grease or sympathy.

      • Col123

        Not only Chinese who look out for themselves. Who are the fools that allow foreigners that advantage ?….

  • rudeo

    And I am sure you know what it is.

  • D lash

    Is it too late to go back to negotiating table?We can do better.