Bidders must produce plans for value-added production

Enmore Estate divestment

By Jarryl Bryan

While a number of bids have been received by the Special Purpose Unit (SPU) from companies – both local and foreign – for the remaining sugar estates, there will be a strong focus on what these companies can do to create value-added products.

A perusal of the information memorandum on the privatisation of the East Demerara Sugar Estate, popularly known as Enmore Sugar Estate, shows this is certainly the case. In section 10 of the document, which was seen by Guyana Times, all companies tendering for the estates must submit a five-year development plan.
Included in this development plan are stipulations that details the company’s plan for producing value-added products must be provided. The bidders also have to provide their plans for collaborating with other local industries to ensure value-added products are made in Guyana.
Value-added production and manufacturing is a critical part of the economic viability of a country. And while sugar is a primary product that Guyana produces and exports, the revelation that cane juice was being imported from Canada and sold in Guyana made headlines and attracted much attention.
Besides packaged sugar and other value-added products sugar can be used for, persons have also spoken of the need for by products such as bagasse and ethanol to be produced from sugar, for Guyana’s energy needs.

Expanding
The companies also have to provide a proposed capital plan for modernising and expanding the estate facilities; particularly when it comes to the sugar factory and replanting the fields. They must also provide details on the financing for capital works, including the source of the money and a marketing plan.
Among the financial information companies have to produce are financial projections covering five years. This must include income statement, balance sheet and cash flow statement.
In addition, there must be a timetable for implementing the plan. The companies also have to provide information on the economic and social benefits that will be derived from their investment, including earnings and savings in foreign exchange and tax revenues.
“It is a critical consideration that the acquisition of the estate and any development plan that is proposed is capable of being financed without any recourse to the GuySuCo/NICIL or the Government and that it can be funded on a basis that will not materially threaten its viability. The source, amounts and timing of each part of the financing plan should be detailed.”

Assets
According to the memorandum, Enmore consists of 6900 hectares of land under sugar cane cultivation. It also has a packaging plant, which has a total capacity of 40,000 tons of sugar and has indeed packaged sugar from estates across the country.
The memorandum also states that the Enmore Estate is capable of producing 75 tonnes of cane per hectare, with a total of 492,765 tonnes of cane per annum. Out of this, the memo states that 19,711 tonnes of molasses can be produced using an average of four per cent of the total cane ground. In addition, it was noted that there are 10 drainage pumps at the estate, six of which are recent acquisitions.

“The Government installed six additional pumps which enhanced the drainage capacity of the cultivation and the surrounding communities. These pumps are traditionally maintained by the estate but arrangements are now being made to remove all social responsibilities from the estate back to the Central Government.”

Bids
A few companies, including several foreign ones, have bid for the estates that are available. According to the bids that the SPU received, Liberty Investments Inc bid for the Enmore Estate.
Meanwhile, Guygulf International Trading Development bid for the Skeldon, Rose Hall and Enmore estates. Guygulf International is the parent company of local subsidiary Nand Persaud.
Apart from Guygulf, D Rampersaud and Co Ltd submitted a bid for the Skeldon Estate; Industrial Equipment Sales and Service Incorporation (IESS) will vie for Rose Hall Estate, and Kadem Sugars Inc is in the running for the Rose Hall Estate.
Tenders closed on October 31, 2018. Absent from among the bidders is Demerara Distillers Limited, who in a statement on Friday revealed that it decided not to submit its bid for the Enmore Estate. It acknowledged the importance of the industry both to produce its rum and for sentimental reasons but noted that its due diligence did not justify making the investment.
Liberty investments Inc, the company that bid for the Enmore Estate is a California-based Construction Company that bills itself as a custom home builder. Meanwhile, Florida-based Guygulf International Trading Development has as its principals Hefazul Hakh, Ragindra Persaud and Faiz Al-Abidee.
While Ragindra Persaud is the Chairman of Guyana’s Rice Millers Association, he is also Chief Executive Officer for Guygulf’s local subsidiary. IESS, meanwhile, is a US-based industrial equipment company involved in the oil and gas sector.