Home Letters The Enmore Packaging Plant and industrial development on the ECD corridor
Dear Editor,
Reference is made to several news articles in the press recently on the captioned subject, where it was reported that the Government is scrapping the Enmore Packaging Facility to facilitate an industrial development project by GKB.
From examining these articles, it would appear that the media houses that carried these articles did not care to clarify with the authorities whether indeed the Enmore Packaging Plant will be scrapped to accommodate this Private Sector expansion project or will be relocated.
If one were to peruse the budget speech 2022, it was reported by the Senior Minister with responsibility for Finance that the Government is indeed expanding GuySuCo’s packaging capability at Albion and Blairmont.
Nowhere in any Government report or officials’ statement, or even the private entity’s statement to the press suggest that the packaging facility will be scrapped. One who is familiar with packaging plants would know that it is essentially a warehouse with a set of machinery–which can easily be relocated to another site. This could very well be the case with the Enmore packaging facility where the machinery of the packaging facility will be relocated to one of those locations previously mentioned and the new investment that will be made will expand the packaging capacity at those locations.
It also makes sense as well to relocate the packaging facility if the intention is to consolidate the operations and to leverage economies of scale and scope through investment to expand the productive capacity. It also makes economic and financial sense to lease and/or sell the remaining assets at Enmore which will not only generate revenue for the State through the lease and or sale of the land, but also in the form of taxes, VAT, PAYE, and corporate taxes.
According to the CEO of GKB, Faizal Khan, the total estimated investment is some US$60 million or GY$13 billion. The multiplier effect of this investment over the first five years following the development phase of the project can be as much as three times, conservatively. That’s about $39 billion taking into account both the direct and indirect impact. These include direct employment of an estimated 500 persons, taxes paid for the employees and the company, the indirect employment created through the value chain – that is the procurement of goods and services that would be required in the entity’s operations. Altogether, this is a positive development both on a macro and micro level for the economy.
While some commentators and media houses seem to be carried away with what would happen with the packaging facility attached to the sugar estate; and without verifying from the authorities, it seems as though there is a concerted effort to propagate all sorts of falsehoods and to paint an adverse picture about the Administration’s management of the sugar industry.
It should be noted that under the previous Administration in 2015, a Commission of Inquiry (CoI) headed by Dr Clive Thomas was launched, which cost taxpayers GY$50 million. In that CoI report, it never recommended the closure of any of the estate. In fact, it was recommended that further studies should be conducted including strategic options analysis. Several other recommendations were made, none of which were adopted by the Government at the time.
Hence, the economic catastrophe that was created with that egregious political decision then led to the compounded deterioration and destruction of the industry, putting thousands of persons out of a job and hundreds of businesses suffered great losses in revenue, non-performing loans in the banking sector increased significantly as a result of the income loss by many businesses and households, who couldn’t service their mortgages and other loan facilities.
The current Administration campaigned on reopening the sugar industry, largely to put back people to work and resuscitate the village economies that those sugar estates once sustained for years. Despite this, important to note is that one has to be practical wherein it would be difficult to resuscitate all of the estates given the abrupt closure where those estates were down for more than three years. For example, the Wales Sugar Estate is beyond re-operationalising.
For this reason, the Government is converting the Wales estate into the Wales Development Authority, an industrial zone where the gas-to-energy project will be located. In view of this, the Administration understands the importance of engaging the Private Sector to invest in these estates – not necessarily to produce sugar but in any other venture that will create employment and indirect opportunities in the supply chain and value chain of these communities, and the wider economy.
In other words, the Government is doing the right thing to find strategic alternative investments in partnership with the Private Sector for the reasons stated above.
Yours faithfully,
JC Bhagwandin
Financial Analyst