No secrecy in ethanol study MoU – ANSA McAL

Regional conglomerate ANSA McAL on Wednesday said it is prepared to invest US$ 300 million to set up a world-class ethanol plant here should results of a US$ 2.7 million feasibility study being conducted show that such a project is viable.

The trading company also clarified that the Memorandum of Understanding (MoU) it signed with the Guyana government last year is only for it to conduct a feasibility study on the setting up of the plant. It dismissed reports in a certain section of the media that the pact was a secret deal and Guyana had committed acres of land to the company. The resultant controversy promoted the government and the company to issue statements denying that the deal was secret.

A team from the group is currently in Guyana to meet with stakeholders to explain the details of the study it is about to undertake. On Wednesday afternoon, officials held a news conference at the Pegasus Hotel. ANSA McAL said it has given itself until the end of this year to complete the study and present its findings to the Guyana government. Last week, ANSA McAL Trading Limited in a statement said it had signed an MoU with the Guyana government for the establishment of an ethanol production project.

According to the trading company, the MoU was signed by ANSA McAL Business Development Executive Anthony N Sabga III; head of the Presidential Secretariat, Dr Roger Luncheon; and former Guyana Office for Investment Chief Executive Officer Desmond Mohamed.

It was the first time a report on the deal had been made public, though according to the Trinidad Guardian report, the agreement was signed on September 30, 2011. It was witnessed by then Agriculture Minister Robert Persaud, who is now natural resources and environment minister; ANSA McAL Group Finance Director Aneal Maharaj and ANSA McAL Trading ( Guyana) Managing Director Beverley Harper.

According to the statement, ANSA McAL said that both parties were currently conducting an in- depth feasibility study, which includes reports on infrastructure and development works, plant, equipment, and rolling stock. The ethanol plant is projected to have the capacity to process up to 2,000,000 tons of sugarcane per year and produce up to 40 million gallons (nameplate capacity) of ethanol per year. This agro-energy industrial project would be built on 110,000 hectares of virgin land, according to the statement.

The Guyana government has strategically adopted a policy to foster the development of economic activities in the country in an efficient, environmentally safe, and sustainable manner.

“As a result, the government of Guyana and a subsidiary of the ANSA McAL Group, a regional conglomerate, have agreed to partner to establish a world-scale bio-fuel project. The proposed ethanol project will be well positioned to successfully become a low-cost, globally competitive provider of ethanol to international and regional markets,” the statement said. The statement noted it is expected that through the synergy between the Guyana government and ANSA McAL, the people of Guyana will benefit through: the generation of entrepreneurial service industries, employment and wealth creation.

Guyana will also be presented with the opportunity to become the regional leader in the development of regional policies, standards and frameworks for utilisation of alternative fuels, with the potential of reducing the region’s dependence on fossil fuels.

Nothing secret, no deal

Meanwhile, during a question-and-answer segment following a Powerpoint presentation at the news conference, Maharaj assured that the group would share the findings of the feasibility study with the Guyana government, but could not make them public because of the competitive nature of the project.

“Making such agreements public puts both parties at a competitive disadvantage,” Maharaj said.

According to him, at the end of the day, it’s a business agreement and business is competitive in nature.

“ANSA McAL competes for capital and competes for projects with many other companies regionally, so I will be hesitant to give you an assurance that we will share that agreement with you,” Maharaj said. He, however, said that ANSA McAL would be open with the media as far as possible, but the release of agreements must be with the mutual consent of the Guyana government and the organisation.

Addressing the issue of the nature of the MoU, which was made public last week but was signed September last year, Business Development Executive Anthony Sabga III said: “It’s obvious that there is some level of lag between the signing of the agreement and when this release was actually sent out. Certainly, there is nothing sinister about that.” He, however, said that the delay had to do with ANSA McAL and the Guyana government agreeing to the content of the news release.

Sabga also said that the delay could have been as a result of Guyana going into the November 28, 2011 General and Regional Elections. “You did go through an election and as such… public relations was not a priority, seeing that the government was going into an election at the time.”

World-scale plant

During the Powerpoint presentation, Maharaj noted that if everything goes well ANSA McAL will be setting up a world-scale plant. He said the feasibility study is being conducted in a phased approach, to be completed in November 2012. He cautioned that the project involves high risks, especially in terms of land suitability and crop vulnerability to pests and water saturation, and emphasised that approvals for the execution of the project are dependent upon the findings of the feasibility study.

Additionally, Maharaj noted that at this stage soil tests to determine the suitability of the land are key, as well as variety and yield efficiency. The transport agreement, selection of plant technology, markets and off take agreement; establishment of commercial terms; economic viability and country benefit assessment are also factors which would be examined. Should the project fulfil the necessary criteria, approval is then required from the government of Guyana and the ANSA McAL Board, Maharaj noted.

Why Guyana

In explaining why Guyana was chosen for such an investment, Maharaj said this country has some 300 years of successful sugar cane cultivation, a key material for the production of ethanol; the country’s agricultural scale and depth experience also influenced the decision. Further, Maharaj said, ANSA McAL Trading first established a group here in 1992 and views Guyana as having a stable currency, democratic government, intelligent and productive workforce; and generally being a good place to do business.

He said the significant investment of approximately US$ 300 million will result in enhanced infrastructural development for this country, creation of thousands of jobs, while downstreaming of industries, resulting from the project, will position Guyana as a leading provider of renewable energy in the region and also develop the human capital of the country through training.