Komenda Sugar Factory to resume operation without new concessionaire
Adnan Adams Mohammed
In spite of Cabinet’s approval of Park Agrotech Limited, a Ghanaian company in the agribusiness sector, as the preferred strategic investor for the Komenda Sugar Factory, the contract is not yet to be in force as its awaits the government to put in place a sugar policy to guide the operations of the factory.
As the defunct factory is expected to begin operations later this month, the Trade Minister, Alan Kyerematen has informed Parliament that, there is the need for all stakeholders to exercise patience as the sugar policy is being drafted to enable the concessionaire take over fully.
The Komenda Sugar Factory, which was built at a cost of $35 million from an Indian EXIM Bank facility, was inaugurated by then President John Mahama in May 2016, amid pomp and pageantry but was locked after a few test runs. The factory was also expected to generate energy for its production activities and produce by-products such as molasses for the alcohol industry.But many challenges, including the unreliable supply of sugarcane for continuous processing after the preliminary test run, hampered the operations of the company. However, in November 2017, the Akufo-Addo government initiated processes to revive operations of the factory.
“Mr Speaker, following the approval by Cabinet as required by conventional practice, the Transaction Advisors entered into final negotiations with the successful bidder with the view to entering into concession agreement for the operations of the Komenda Sugar Factory,” Mr Kyerematen told Parliament last week. Adding that, “The factory was not handed over to the concessionaire for commencement of operation after the farmers negation with the concessionaire.”
He further explained that, “It became obvious that unless there is a sugar policy which will provide the strategic framework for the work of the concessionaire it wasn’t going to be possible for us to complete the process of handing over the factory to the concessionaire. So, it only stands to reason that we go through the process.”
The Minister said over the first three years of the agreement, Agrotech would invest $28 million in capital expenditure and working capital, including paying an annual concession fee of US$3.3 million for a period of 15 years.
Also, a $24.5million Indian EXIM Bank credit facility was being sourced to develop and implement a plantation and out-grower scheme in a bid to provide raw materials for the factory.
Under the scheme, some 14,100 acres of sugar cane would be cultivated to feed the plant.
Agrotech is expected to work with STM Projects Limited, an Indian company with extensive experience in the management and operation of Sugar Mills and plantations both in India and other parts of the world.
The Agreement would be effective upon completion of Condition Precedent, which includes the approval of the Agreement by Parliament, adding that the required documentation would be brought to the House in due course.
The Minister said during the final negotiations it became necessary for action on the implementation of the project to be delayed until the finalization of the National Sugar Policy, which was intended to provide the strategic policy framework for the implementation of the project.
He explained that after series of extensive stakeholders’ consultations, the National Sugar Policy was finally approved by Cabinet in 2019”.
Mr Kyerematen also stated that the approval of the Sugar Policy paved the way for the Concessionaire to be formally introduced to the Chiefs and Elders of the Komenda Traditional area in November, 2019.
He informed the House that the formal agreement between Park Agrotech Limited and Komenda Sugar Development Company Limited had now been executed.
He assured the legislature that as soon as the restrictions on foreign travels arising from the Covid-19 pandemic is lifted and the necessary protocols and approvals have been secured, the technical partners of Park Agrotech would begin a comprehensive programme to bring the sugar factory back to life.
“I wish to assure this august house that as soon as the restrictions on foreign travels arising from the Covid-19 pandemic is lifted and after all the necessary and relevant protocols and approvals have been secured, the technical partners of Park Agrotech will begin a comprehensive programme action to bring the Komenda sugar factory back to life,” he said.