Barama feeling the squeeze

Barama promising major developments next year
Wednesday, December 20th 2006
StabroekNews

Flayed over its export of logs and non-compliance with its investment plans Barama Company Limited yesterday reiterated its commitment to adding value to the industry and expressed the intention to have its Buck Hall operations running on all cylinders next year.

At a press conference held at the Cara Lodge, the company said that it wanted to dispel the negative press recently about the industry and outlined some of its achievements and future plans.

Barama General Manager Girwar Lalaram said that the company's sawmill at Buck Hall on the Essequibo River will be producing from January or February, 3000 cubic metres of sawn lumber per month. He said that because of skills constraints the plant now only produces 1200 cubic metres of sawn lumber.

He said that the entire production is sold to one of China's largest distributors of tropical hardwoods. As for the veneer plant the company tried unsuccessfully to adopt Chinese technology but had to resort to Japanese technology to make the veneer production sensible. This, he said, was the reason for the delay in the Buck Hall project. Plywood production had been one of the primary objectives of Barama from its inception.

As for kiln-drying, Lalaram said that the equipment for this has arrived in the country and is located at the company's Land of Canaan facility waiting to be transferred to their location at Buck Hall.

Lalaram said that the installation of all the components at Buck Hall is projected for the third quarter of 2007. "Factory buildings, work sheds and buildings for accommodating employees are all in place. In addition to the significant labour force that will be employed when the Buck Hall facilities are in place," he said.

He said that the dry-dock facility and co-generation are also supposed to be completed during next year. He said that the cogeneration is being done in collaboration with Synergy Holdings Inc. This co-generation facility will have a capacity of three megawatts.

According to Lalaram, apart from the initial US$150M invested, the company has made an investment of "a few hundred million dollars," and is expected to further invest in the US$35M Buck Hall facility.

He lashed out at the several groups which lobbied SGS-Qualifor and the Forest Stewardship Council against Barama being certified. "This is anti-national since the nation as a whole stands to gain, not just Barama," he said.

He said that the UK market is now requiring that products are certified through the Forest Stewardship Council and have chains of custody. Lalaram said that a visit by an international audit team during the last week of Novem-ber to assess Barama's compliance with the FSC standards resulted in the company maintaining its certification. "The effort and resources put into the certification process underscore Barama's commitment to the rigorous international standards set by FSC, and to sound social and environmental practices," he said.

On the issue of transfer pricing, Lalaram said that the term is an economic one which is being misused by the media. He said that the company doesn't engage in transfer pricing and the Guyana Forestry Commission has not approached the company on the matter.

Commissioner of Forests James Singh told this newspaper some weeks ago that the issue of transfer pricing is the subject of an ongoing investigation. Many letter writers to the Stabroek News alleged that Barama and Jaling Forest Industries Inc are engaged in this. Singh said that action will be taken against companies which engage in transfer pricing. Minister of Agriculture Robert Persaud stated recently that companies like Barama could face re-examination of their concessions if it is found that they haven't lived up to commitments in their business plans.

Lalaram said that only recently did the company make a profit after being in the red since the commencement of operations in 1993. He concluded that overall, there has not been a reasonable return on investment and despite this, the company's principals continue to finance the operations.

He said that production of plywood is stymied because of spares that are needed for fixing problems with the dryer. He said that the spares amount to about US$700,000. According to him, it is important for the company to recommence the plywood exports since prices for the commodity are high at the moment.

Lalaram said that the company hopes to be supplying India and China with products from the Buck Hall facilities. Lalaram said that logs seem to be the commodity of preference in places like India since the tariff is lower on them.

On working the concessions of smaller companies in addition to its own sprawling north west concession, Barama's General Manager said that this is a practice that brings benefits to both parties. He said that many smaller operators approach Barama for assistance and the company would engage them in partnership, but with majority rights.

Asked whether absenteeism is a result of possible poor working conditions and remuneration, Lalaram went through great pains to outline the benefits offered to the workers. He said that occupational safety and health were important factors of the FSC certification and that they are rigorously enforced.

When asked if there is any independent monitoring of the company's harvesting activities as was the case when the Edinburgh Centre for Tropical Forests was hired in the 1990s, Lalaram said that with the FSC certification this is unnecessary. He said that the company has to submit to audits every six months to ensure that all FSC certification requirements are being complied with.

He said too that the company is working towards Chain of Custody Certification, a system which connects responsible forest management practices and products with consumers. With this certification, Barama will be able to "demonstrate its commitment to environmentally and socially responsible forest management by labelling its products with the FSC trademark." He said that the certification is for companies that process, transform or trade FSC forest products, and can be used to demonstrate compliance with some government or private procurement policies and specifications, thereby increasing access to these markets. (Johann Earle)