JIS News

After months of discussions and negotiations, the divestment of the Government’s sugar estates, is scheduled to be completed by September 30.
The estates, comprising Bernard Lodge, St. Catherine; Frome, Westmoreland; Hampden, Trelawny; Monymusk, Clarendon; and Duckenfield, St. Thomas, are being divested to Brazilian bio-energy fuel firm, Infinity Bio-Energy Limited (IBE).
In June, Prime Minister Bruce Golding, signed a Heads of Agreement, with principals of the bio-energy fuel entity, for the divestment process, to be undertaken.
Under the agreement, the Sugar Company of Jamaica (SCJ), will continue to manage the factories, until the transition period ends. The Government will, thereafter, enter into a joint venture arrangement with Infinity, through a company, Newco, to be established, in which the administration will have a 25 per cent holding.
Other provisions of the agreement include: leasing of sugar cane lands by the Government to Newco, for a term of no less than 50 years, with an option for another 25-year lease; and sale of factory lands, comprising the compound and an additional area of not more than 100 acres immediately surrounding the factories, to Infinity.
The Government is also to enter into an implementation agreement with Infinity, within 30 days of the completion of the transition, confirming its commitment to support the smooth implementation of the transaction.
The divestment comes amidst reports of mounting debts totalling upwards of $20 billion, racked up by the factories. In light of this, the divestment is aimed at converting the industry into a viable and successful one, with spin-offs for Jamaica’s energy sector, as well as diversification of the overall sugar industry.
Mr. Golding hailed the agreement, as the commencement of the process that will lead to the modernisation of the sector, thereby increasing its value-added contribution to the economy.
“What we are moving into, is a cane-growing industry that is modernised and efficient, and one that gives the best prospects for our workers,” the Prime Minister said, during the signing ceremony at Jamaica House.
He said the Government was committed to developing the sugar industry, pointing out that the partnership with Infinity, would serve to strengthen Jamaica’s energy sector, through co-generation and ethanol production.
“This Government will make sure that this partnership with Infinity works in the best interest of the Jamaican farmers, stakeholders, and the Jamaican people,” the Prime Minister assured.
Chief Executive Officer of Infinity Bio-Energy, Sergio Thompson-Flores, said the company would do everything to ensure the partnership’s success.
Prior to the signing of the agreement, Agriculture Minister, Dr. Christopher Tufton, held extensive consultations with industry stakeholders, to discuss details of the divestment exercise. Interests included workers at all factories as well as private estate owners and growers.
In a subsequent statement, outlining additional details of the agreement, Dr. Tufton informed that Infinity has agreed to introduce methodologies, aimed at improving productivity and developing the industry, as well as to provide assistance to farmers.
He further said that the investors would “supply the local market with the products and volumes of sugar and sugar related by-products, and will develop new products, diversifying its range of products, including but not limited to sugar, ethanol, molasses, and co-generation of energy from bagasse and bagasse pellets.”
He explained that assistance to the farmers, would be undertaken through a development programme, which would provide them with associated services, such as cane cultivation, harvesting, loading, and transportation techniques; developing new varieties of sugar cane, either through a research and development programme of local varieties, or with the importation of suitable varieties developed by Infinity and their partners; and increasing mechanisation and irrigation facilities, when and where appropriate, to levels that maximise financial returns.
According to Dr. Tufton, sugar production is projected to be 125,693 tonnes in 2009, decreasing to 62,000 tonnes in 2010, and would be maintained at this level up to 2013. Additionally, molasses production is projected at 63,800 tonnes in 2009, decreasing to 27,638 tonnes in 2010, and being maintained at around 27,200 tonnes.
Ethanol production, on the other hand, is slated to increase over the next two years, with the Brazilian firm expected to produce some 80,000 kilolitres (80 million litres) locally, during the period. This is expected to increase to 135,000 kilolitres (135 million litres), by 2013.
In addition, the Minister said that the company would produce some 138 Giga Watt hours of electricity in 2011, which is expected to increase to 158 in 2012, and 168 in 2013. “These figures represent net production to be sold to the national grid, after having satisfied their internal energy demand,” he informed.
Dr. Tufton indicated that the production of the mix of products outlined, would require significant increases in sugar cane production, from 1.4 million tonnes in 2009 to 2.5 million tonnes in 2013.
“The new company only proposes to produce half of this amount, hence, there is a significant opportunity for existing cane farmers to be engaged in the production of the other 50 per cent,” the Minister explained.
He pointed out that through Newco, or otherwise, Infinity, would keep an experienced team locally, and provide training and incentives for local professionals.
The Minister pointed out, that the South American country produced 20 per cent of world sugar output (30 million tonnes) in 2006, as well as a third of the world’s ethanol production or 16 billion litres, during that year.
In the meantime, Dr. Tufton advised that the status of the sugar workers is expected to remain unchanged for the duration of the negotiations, until the completion of the transfer. He gave the assurance that all of the necessary redundancy payments would be made on time, consistent with labour laws and the contracts signed between the trade unions and the SCJ.