Minority: Komenda Sugar Factory Likely To Fail

The New Patriotic Party has expressed fears that the US$24.5 million Komenda Sugar Factory which was inaugurated on Monday by President John Dramani Mahama has the potential of becoming a white elephant if the emerging and existing challenges confronting the operations of the company are not addressed immediately.

The NPP notes that even though the factory has the potential to alleviate poverty through job creation and also cut the country’s sugar exports, government and its partners failed to consider certain fundamental problems associated with the running of the factory before the commissioning.

At a press conference held yesterday , the party’s Member of Parliament for Wenchi and Ranking Member for Trade and Industry, George Gyan Baffour, said the government’s penchant for political expediency did not allow for critical analysis to be done on the whole project before roll out.

According to him, factors such as unavailability of sugarcane to feed the factory, unattractive prices for sugarcane produced by farmers and the high cost of irregular electrical power are likely to cripple the factory.

‘Where’s the sugarcane for Komenda Sugar Factory”? he queried.

He added: “The siting of the facility is yet not too far from the sea and this could lead to expensive maintenance cost on the iron and steel component of the plant due to the salty sea breeze. This happened to the old plant and maintenance exacted a huge toll on the profitability of the factory. In those times the plant had to be shut down every year to allow for the extraction of corroded matter from steel pipes. The factory ought to have been located a bit farther from the coastline.”

Prof Gyan Baffour further noted that the diversion of farm lands from the production of multi-crop to mono-crop sugar cane presents a possibility of food insecurity in the area, especially given the fact that the new factory is 25 percent bigger than the old.

“President Mahama at the commissioning of the revamped factory said government is in the “process of developing a new national sugar policy”. It is a typical John Mahama-led government case of placing the cart before the horse. It happened in the hasty crafting of the Petroleum Revenue Management Act where as of yet a Petroleum Exploration and Production law which the Revenue Management Act ought to have been mounted on has not been put in place,” he stated .

According to Prof Bafour , sugar cane farming is a water dependent activity and the production process requires adequate and regular supply of clean water so Reliance on the “galamsey”- polluted Pra-Offin river which is currently what is available will challenge the survival of the factory as the mercury-poisoned waters may contaminate the end product.

He indicated that the primary canal that would feed the farms with irrigation water from the Pra River had long collapsed.

“It has not yet been rehabilitated. So how are the farms going to be irrigated? If the yield should fall or if the world sugar price should fall, farmers would require financial protection to keep the industry working. In this regard, the start off offer price of GHS60.00 per tonne is too low to sustain the interest of farmers in the business. These are early days but we need to get the basics right at this early outset. This situation has happened in such sugar-producing countries as Kenya,” he stated.

He added that insufficient or irregular supply of cane sugar from the outgrower farms could jeopardize the capacity of the factory to engage in uninterrupted production.”

“As at the time of the commissioning of the factory on Monday, May 30, 2016 the factory was and still is far from ready to start production since the outgrower farms are not ready. Running a sugar plant is like running an oil refinery or aluminium manufacturing industry. Once it is started, it must be kept running, otherwise it becomes an expensive white elephant which will keep gulping down colossal expenditure where there is no production. The question to ask therefore is what the razzmatazz was about; if not to serve as a mere propaganda gimmick by President John Mahama who seems to think that governance is about media blitz,” he added.

He said the Komenda Sugar Factory had been designed to produce its own electric power requirement but until it is able to utilise at least 80% of its capacity it would not be able to generate enough electricity to feed the factory.

“At the outset at least it requires to be fed on national grid. This is to happen at a time when the country is facing acute and epileptic power supply. The high electricity tariffs would soon bite unless some arrangement of subvention is made to cushion the factory, at least for now. The cost of electric power supply in the non-production maintenance season of the factory will be a major challenge to the cost of production as the case is everywhere else. Hence, if cost of electricity is astronomical as the case is in Ghana today, the viability of the business will come under severe strain,” he noted.

According to him, these as some of the critical issues that should engage the attention of government as the country strives for self-sufficiency in sugar production.