Government mulling changes to Barama’s investment agreement

BARAMA Company Limited yesterday gave assurance that it will recommence plywood operations for local consumption in June and for overseas by December, as it seeks to re-employ some of the displaced workers sent home after the closure of the plywood plant.
Further, the company is meeting with the Government of Guyana with a view to revisiting the investment agreement signed between them, given that new realities have changed the shape of the industry.

The company is looking at producing in excess of 2,400 cubic metres of plywood per month from June this year.
Minister of Agriculture Robert Persaud was a part of a guided tour of the company’s Land of Canaan operations, where they inspected the newly rehabilitated boiler plant and plywood factory. In October last year there was an explosion at the boiler plant which put it out of commission.
With the minister were Commissioner of Forests James Singh and others from the ministry and its related agencies. For Barama, Chief Executive Officer Clement Ooi and Head of Corporate Affairs and Forest Planning Neil Chand led the discussions.
Chairing the press briefing after the tour was Chand. He said, “Today has been a special day for us as we have made a bold attempt to restart our plywood factory, which as a result of a disaster on October 4, 2010, caused the immediate shutdown of the factory and from then to now we have been working assiduously to restart the factory. We are absolutely confident that the restart of the factory will commence on schedule, restarting production in June 2011 for the local markets, and by December 2011, having both the export and local market being satisfied.”
He noted that the five-tonne boiler has already been installed and said that there are some other installations to be done to ensure that the boiler runs efficiently.
“We also want to thank the Government and other stakeholders who have given us the necessary support and guidance in taking us where we are today. When the disaster happened in October, everyone was concerned as to the future of the plywood industry in Guyana. Today we have managed to overcome that challenge to an extreme level where we feel that plywood could be something once again on the local and export markets, earning foreign revenue for Guyana,” Chand said.
“We did not stop any other operation in the company other than the plywood operation. We maintained our operations; and with that, we are confident in moving forward we will see greater efficiency and productivity in our operations. We have a new integrated approach and with that approach, we are confident that we will have greater returns,” Chand said.
Delivering brief remarks before the meeting Minister Persaud said, “I am happy that [Barama] is making progress in terms of restarting their plywood operation.”
He said Barama is now a “new” company in the sense that its processes will be more efficient for the production of plywood. “The whole configuration of Barama has changed and I make the point because what I just saw here the installation of a smaller boiler and much more of the upstream work will be done at Buck Hall. [It is envisaged] that only the downstream element of plywood manufacturing will be done at this location,” the minister said.
“From the government standpoint, our objective is to have the company not only resume plywood production, but also endure, so that as many workers as possible can be accommodated into the operations,” he said.
“I must say, in the interest of transparency and openness that we have already commenced discussions with Barama on revisiting the original investment agreement and we expect that those discussions will see changes to the investment agreement. We hope very soon to finalise those discussions and the president himself has been involved at certain points and is being briefed and kept abreast of these discussions,” he said.
According to the minister, some of the areas that may see changes  are the size of the forest area, the type of operations, the type of benefits in terms of looking at the royalty that is paid, acreage fees and “a whole range of issues.
“The people of Guyana whose patrimony is being utilised must get a better and fairer deal,” said the minister, justifying the revisiting of the investment agreement. One of the reasons for the reconsideration of the agreement is that Barama has not been able to fully utilise all of its concessions. “It is not about taking away anything, but rather looking at the best arrangement,” said the minister.
Persaud noted that there is a booming construction sector, hence the strong demand for plywood, locally and internationally. “We expect that the resumption in production will not only see availability, but also affordability,” the minister said. He said that based on what is taking place on the international market, government expects to have discussions with Barama on the pricing of the products.
“As a stakeholder, we are willing to support the company as we have been doing, and hope that we could see a return to normalcy, going back to not only the level of production that existed prior to the explosion [which precipitated] the closure, but also to a higher level, such as those seen when the company first started up,” the minister said.