An Indian company with international experience in the sugar industry is interested in investing in the low-producing Skeldon Sugar Factory with the aim of making it profitable in less than two years , an investment broker said Sunday.
“From our conversation, we believe that within 18 months or less that Skeldon could be profitable,” Managing Director of Sunrise Holdings, Guyana-born Tony Joseph told Demerara Waves Online News. We believe that with proper management techniques, changes and some modernization of certain areas of the sugar plant, some harvesting changes that we can bring the price of sugar to world market competitiveness,” he added.
Noting that the Skeldon Estate was operating far from capacity, Joseph said the almost US$200 million Skeldon Sugar Factory requires another 14,000 hectares of cane to ensure the factory runs at full capacity and lower cost of production rather than the current 50 percent.
Joseph said the company, Srinathji Ispat Limited, plans to build a refinery to satisfy the Caribbean’s demand for 250,000 tons of refined sugar.
The expression of interest has come at a time when government plans to shrink the operations of the cash-strapped Guyana Sugar Corporation (Guysuco).
After a January 23 to 26, 2017 visit to Guyana during which representatives from Srinathji Ispat Limited toured Guysuco’s six estates, Director of Srinathji Ispat Limited, Gaurav Gupta told Minister of Agriculture, Noel Holder that his company wants to take over all of Skeldon’s operations.
“After visiting the plant and other facilities; we express our interest for taking over the management and operations of the entire estate including sugar manufacturing and cogeneration of power divisions and to put required investment for same,” Gupta said in his letter to Holder.
The Minister of Agriculture told Demerara Waves Online News that he might have seen the letter and the usual process is for investor applications to be sent to the Guyana Office for Investment (GO-Invest).
Joseph said so far Srinathji Ispat Limited has not received even an acknowledgement from the Agriculture Ministry or any other government agency to its letter dated January 27. “At this point in time, we need to have a response from the Ministry of Agriculture and in general the government and Guysuco before we can decide anything. We need to know if they want to accept this letter of interest, if they are interested in moving forward and at that point in time we can start discussing these things,” he said when asked how much it could cost to revive Skeldon.
Srinathji Ispat Limited, following its visit to Skeldon on January 26, 2017, told government that it was ready to provide details and engage in discussions with the relevant authorities. While no figures were immediately available, the company said its investment would be its share in the business. “We intent to put our equity as investment required for modernization of the plant to operate smoothly and profitably and also for the working capital whereas the existing assets including plant and machinery would be as equity of Guysuco,” Gupta added in the letter.
However, Joseph much would depend on talks with government because “we don’t know how much the government will offer us.” He said Srinathji Ispat Limited is interested only in Skeldon, barring a “nice” deal for all of the estates. “It’s the most modern. It’s the largest capacity mill. The others we saw didn’t have the capacity to make as much sugar as Skeldon and that’s quite a driving force,” he said.
The two major sugar unions- Guyana Agricultural and General Workers Union and the National Association of Agricultural Commercial and Industrial Employees (NAACIE)- and the opposition People’s Progressive Party Civic (PPPC) say they need more information from government before responding with concrete proposals on how to save the sugar industry.
Mr. Rajesh Agarwal, President of Integrated Casetech Consultants Pvt Ltd, Delhi NCR, India, an associate Company of Shrinathji Ispat Ltd and Simbhaoli Sugars Ltd, was also part of the delegation that visited Guysuco’s estates last month.
Shrinathji Ispat has worked in the sugar industries and co-generation plants in Mali, Zimbabwe, The Phillipines, Cambodia, Bangladesh, Ghana, Ethiopia, Sri Lanka, Vietnam and India.