FSC affairs must be investigated, says NFU

  • 31st May 2016
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The National Farmers Union welcomes government’s decision to suspend the grossly over-priced Rarawai co-generation project and the sugar-syrup making project at the Penang Mill to allow for feasibility studies to be undertaken.

But the Union calls for a thorough investigation into the affairs of FSC – in particular the super salary collected by its executive chairman Abdul Khan and the indisputable conflict of interest that exists in relation to Mr. Khan’s private power generating business and his push to set up a co-generation plant at Rarawai.

The move to suspend the two projects come within days of critical questions NFU raised on the viability of both the projects in our submissions to the parliamentary Standing Committee on Economic Affairs vis a vis the two Sugar Reforms Bills.

NFU had questioned the colossal $F217m quote for the Rarawai project given by Abdul Khan when our own inquiries from competent sources revealed that the 40MW plant at Rarawai can be installed for less than $F90m. This would include the cost of installing the 2x20megawatt turbines, building costs to the factory, as well as the cost of transporting bagasse from the mill to the cogeneration plant etc.

The Union says the issue should not be just brushed under the carpet. We seek a thorough  investigation into the following matters:

  • Abdul Khan’s huge remuneration package. The write back of FSC’s impairment losses between 2012 and 2014 to show (paper) profits in order to justify his super salaries even though FSC has consistently made heavy losses for these years. Mr Khan has refused to divulge details of his salary.
  • Why Mr. Khan was seeking to raise more than twice this amount through the Exim Bank of India loan facility of $F152m with a further $65m to be raised locally.
  • The serious conflict of interest that exists between his privately owned company, Pacific Renewable Energy Ltd which had signed a 12 MW power supply agreement with FEA some two years ago and the Rarawai co-generation project which he was actively pushing for until this announcement in Turkey.   
  • The $17m co-generation plant at the Labasa Mill which has not been operating due to technical problems since it was completed sometime last year.

 As for the syrup factory for the Penang Mill, NFU had criticised this as yet another preposterous scheme without any understanding of the sugar milling process.

It is ridiculous to suggest that the juice can be extracted at one mill and taken to another for further processing. First, there is the risk of carting the hot syrup over long distances to another mill. The juice has to be kept at a constant temperature and will require specialised equipment. We are talking additional costs here.

Secondly, by the time the juice is extracted, most of the processing task is completed. So why take it at additional cost and high risk to another mill some 80kms away just for the crystallization to take place.

NFU’s advice to government is to urgently appoint a substantive CEO for FSC who clearly understands the milling process and is not driven by conflicting self-interests: that is, if government is serious about restoring FSC and the sugar industry to viability.