This blog will be continued at the following link:
http://guyanaforestryblog.blogspot.com/
Wednesday, March 21, 2007
Thursday, March 15, 2007
Roger Khan's exploratory permit
The issue of an exploratory permit to Roger Khan's company Aurelius was approved by the Board of Directors of the Forestry Commission
Wednesday, March 14th 2007
Dear Editor,
As reported by Stabroek News on March 9, the President's long address to the Guyana Defence Force included reference to apparent inaccuracies in the latest edition of the International Narcotics Control Strategy Report, March 2007, from the US Department of State.
The US report says that the Government of Guyana had announced that it would propose legislation requiring stronger background checks on investors applying for timber concessions. The President told the top brass of the GDF that he did not promise that. Indeed, why should he, because the Guyana Forestry Commission (GFC) has had legislation and procedures since 1997 to do just what the President now says that we should not have; that is, investor screening checks.
The murky case of Aurelius Inc. is a good illustration of why we need the transparent, objective, equitable and consistent application of that GFC legislation (the Forests (Amendment) (Exploratory Permits) Bill which amended the Forests Act 1953 in July 1997 and the GFC associated procedures updated in April 1999. This law provides opportunity for potential investors to bid for the rights to explore in detail the possibilities of commercial and large-scale logging of our natural tropical forest and prepare logging and business plans. It provides opportunity also for the GFC to check on the capacity of the enterprise to undertake forest management for sustained yield over 25 years. The State Forest Exploratory Permits (SFEPs) are for areas advertised by the GFC for competitive bidding, and GFC procedures manual tells its staff how to evaluate the bids.
The GFC manual says that exploratory permits will not be issued for any area that is occupied, claimed or used by Amerindians. In this murky case, the GFC advertised areas (designated by the GFC as A, B, C and D) which had been claimed during the hearings of the Amerindian Land Commission 1966-69. Also these areas south of the 4th parallel of latitude should not have been opened by the GFC for logging and exploration in the absence of a national land use plan (President Cheddi Jagan to Nigel Sizer of World Resources Institute in 1996, and SN editor's note to GFC letter October 21, 2005). Curiously, there was just one bid for each of three of the four areas A-D, and the extensive checking which the GFC procedures required were completed apparently in only two days (May 30 and 31, 2005).
These procedures should have included checks on the financial status of applicants, and the GFC procedures manual provides the names of international auditors able to advise on investor credibility. Those names had been requested by Prime Minister Sam Hinds in 1996. The substantial application fee for an SFEP, US$20,000, was calculated to cover the cost of international scrutiny of investor finances and probity. The evaluations should have included written evaluations by agencies such as the Guyana Geology and Mines Commission, Guyana Land & Survey Commission, and Ministry of Amerindian Affairs, but apparently none were received for Aurelius Inc. The application evaluation noted that Aurelius, a new company registered in Guyana in April 2004, had no experience of logging in Guyana and little technical skills (SN March 18, 2006) but was proposing to open a 25-year logging operation over 119,000 hectares.
The GFC Board of Directors was presented on August 10, 2005 with the Commissioner's recommendation for approval, noting that Aurelius intended to establish a sawmill at Annai (a titled Amerindian Village); although no evidence was produced that the Annai Village Council had given its approval for this mill.
The applications were forwarded to the Minister for Forestry (at that time, Satyadeow Sawh), even though financial information was missing.
The applications were brought back to the Board on October 5, when approval was again given by a majority vote. Stabroek News reported on October 14, 2005 that the exploratory permits had been approved, but this was denied by the Commissioner of Forests in SN on October 21, 2005 as application procedures were incomplete. SN returned to the matter of Aurelius on March 18, 2006, reporting that the GFC Board of Directors had questioned on and after October 5, 2005 the adequacy of due diligence checks by the GFC, including the ownership of shares in the ownership of Aurelius Inc. The Board agreed that "in relation to future applications for SFEPs a more rigorous examination of the bona fides of the applicants would be done". Note that there was no question then about the adequacy of the manual of GFC procedures, only about its application. SN reported on March 28, 2006 that the Aurelius application had not received a response from Cabinet. It is unclear why Cabinet should be involved; it is not a requirement in law. The Commissioner of Forests confirmed in a press statement on March 31, 2006 (SN 1 April) that Cabinet had not given approval. A letter to SN on April 4 asked who had carried out the external due diligence check but the Commissioner of Forests declined to respond to that question in his reply (SN April 7, 2006).
So there remain unanswered questions, about the thoroughness of the application by the GFC staff of their own procedures. This was acknowledged by Minister Sawh, as reported by SN on June 12, 2006.
So the President is right - as reported by SN on March 9 - "I didn't promise that [new screening legislation for potential investors in the forest sector]. I don't know who promised that, but I am not passing no legislation".
Well, we knew that anyway, as the Forests Act revised substantially in 1996 and ready since 1997 has still not been passed for enactment by the National Assembly because it is held up in the higher reaches of the executive for reasons not disclosed.
The annual reports of the US International Narcotics Control Strategy lay emphasis on Guyana's absence of subsidiary legislation to make effective anti-narcotics and anti-money-laundering laws. We should also be concerned about the failures in Government Commissions to implement properly their own procedures. Lack of laws, and lack of use of laws, really isn't good for the international reputation of Guyana. And the President saying that screening of potential investors discourages inward investment suggests that our number one economist is unfamiliar with international codes for investment; such as the OECD Guidelines for Multinational Companies and the international commercial banks' Equator Principles.
And keeping secret the terms of the foreign direct investment arrangements for Asian-owned loggers such as Barama, JaLing, Bai Shan Lin, etc. is surely contrary to Article 13 of the National Constitution 1980, amended in 2003, about open and transparent government. The President should be reminded also of Article 17 of our National Constitution which states: 'Privately owned economic enterprises are recognized, and shall be facilitated in accord with their conformity with the aims and objectives stated or implied in articles 13, 14, 15 and 16.'
Yours faithfully,
Mahadeo Kowlessar
Link
Wednesday, March 14th 2007
Dear Editor,
As reported by Stabroek News on March 9, the President's long address to the Guyana Defence Force included reference to apparent inaccuracies in the latest edition of the International Narcotics Control Strategy Report, March 2007, from the US Department of State.
The US report says that the Government of Guyana had announced that it would propose legislation requiring stronger background checks on investors applying for timber concessions. The President told the top brass of the GDF that he did not promise that. Indeed, why should he, because the Guyana Forestry Commission (GFC) has had legislation and procedures since 1997 to do just what the President now says that we should not have; that is, investor screening checks.
The murky case of Aurelius Inc. is a good illustration of why we need the transparent, objective, equitable and consistent application of that GFC legislation (the Forests (Amendment) (Exploratory Permits) Bill which amended the Forests Act 1953 in July 1997 and the GFC associated procedures updated in April 1999. This law provides opportunity for potential investors to bid for the rights to explore in detail the possibilities of commercial and large-scale logging of our natural tropical forest and prepare logging and business plans. It provides opportunity also for the GFC to check on the capacity of the enterprise to undertake forest management for sustained yield over 25 years. The State Forest Exploratory Permits (SFEPs) are for areas advertised by the GFC for competitive bidding, and GFC procedures manual tells its staff how to evaluate the bids.
The GFC manual says that exploratory permits will not be issued for any area that is occupied, claimed or used by Amerindians. In this murky case, the GFC advertised areas (designated by the GFC as A, B, C and D) which had been claimed during the hearings of the Amerindian Land Commission 1966-69. Also these areas south of the 4th parallel of latitude should not have been opened by the GFC for logging and exploration in the absence of a national land use plan (President Cheddi Jagan to Nigel Sizer of World Resources Institute in 1996, and SN editor's note to GFC letter October 21, 2005). Curiously, there was just one bid for each of three of the four areas A-D, and the extensive checking which the GFC procedures required were completed apparently in only two days (May 30 and 31, 2005).
These procedures should have included checks on the financial status of applicants, and the GFC procedures manual provides the names of international auditors able to advise on investor credibility. Those names had been requested by Prime Minister Sam Hinds in 1996. The substantial application fee for an SFEP, US$20,000, was calculated to cover the cost of international scrutiny of investor finances and probity. The evaluations should have included written evaluations by agencies such as the Guyana Geology and Mines Commission, Guyana Land & Survey Commission, and Ministry of Amerindian Affairs, but apparently none were received for Aurelius Inc. The application evaluation noted that Aurelius, a new company registered in Guyana in April 2004, had no experience of logging in Guyana and little technical skills (SN March 18, 2006) but was proposing to open a 25-year logging operation over 119,000 hectares.
The GFC Board of Directors was presented on August 10, 2005 with the Commissioner's recommendation for approval, noting that Aurelius intended to establish a sawmill at Annai (a titled Amerindian Village); although no evidence was produced that the Annai Village Council had given its approval for this mill.
The applications were forwarded to the Minister for Forestry (at that time, Satyadeow Sawh), even though financial information was missing.
The applications were brought back to the Board on October 5, when approval was again given by a majority vote. Stabroek News reported on October 14, 2005 that the exploratory permits had been approved, but this was denied by the Commissioner of Forests in SN on October 21, 2005 as application procedures were incomplete. SN returned to the matter of Aurelius on March 18, 2006, reporting that the GFC Board of Directors had questioned on and after October 5, 2005 the adequacy of due diligence checks by the GFC, including the ownership of shares in the ownership of Aurelius Inc. The Board agreed that "in relation to future applications for SFEPs a more rigorous examination of the bona fides of the applicants would be done". Note that there was no question then about the adequacy of the manual of GFC procedures, only about its application. SN reported on March 28, 2006 that the Aurelius application had not received a response from Cabinet. It is unclear why Cabinet should be involved; it is not a requirement in law. The Commissioner of Forests confirmed in a press statement on March 31, 2006 (SN 1 April) that Cabinet had not given approval. A letter to SN on April 4 asked who had carried out the external due diligence check but the Commissioner of Forests declined to respond to that question in his reply (SN April 7, 2006).
So there remain unanswered questions, about the thoroughness of the application by the GFC staff of their own procedures. This was acknowledged by Minister Sawh, as reported by SN on June 12, 2006.
So the President is right - as reported by SN on March 9 - "I didn't promise that [new screening legislation for potential investors in the forest sector]. I don't know who promised that, but I am not passing no legislation".
Well, we knew that anyway, as the Forests Act revised substantially in 1996 and ready since 1997 has still not been passed for enactment by the National Assembly because it is held up in the higher reaches of the executive for reasons not disclosed.
The annual reports of the US International Narcotics Control Strategy lay emphasis on Guyana's absence of subsidiary legislation to make effective anti-narcotics and anti-money-laundering laws. We should also be concerned about the failures in Government Commissions to implement properly their own procedures. Lack of laws, and lack of use of laws, really isn't good for the international reputation of Guyana. And the President saying that screening of potential investors discourages inward investment suggests that our number one economist is unfamiliar with international codes for investment; such as the OECD Guidelines for Multinational Companies and the international commercial banks' Equator Principles.
And keeping secret the terms of the foreign direct investment arrangements for Asian-owned loggers such as Barama, JaLing, Bai Shan Lin, etc. is surely contrary to Article 13 of the National Constitution 1980, amended in 2003, about open and transparent government. The President should be reminded also of Article 17 of our National Constitution which states: 'Privately owned economic enterprises are recognized, and shall be facilitated in accord with their conformity with the aims and objectives stated or implied in articles 13, 14, 15 and 16.'
Yours faithfully,
Mahadeo Kowlessar
Link
Global timber page on Guyana
The global timber page on Guyana, has been updated to include information on world cup cricket and Jaling.
Guyana, one of the most corrupt countries in Latin America, is noted especially for links to the illegal drug trade. Guyana has a particuIar reputation for money laundering and, given that trade in timber accounts for most Guyana's official export earnings, it is likely that at least some of that trade is associated with money laundering.
The unit prices cited in the ITTO's fortnightly "Tropical Timber Market Report" indicate that the difference between the unit prices for Guyana's log exports are remarkably small relative to unit prices for equivalent products exported from other producer countries. The difference might well be attributable to transfer pricing fraud. Given that, during 2005, logs account for almost all India's (and half of China's) timber imports from Guyana, and that India and China (primarily India) account for more than half of Guyana's log exports, India and China may well be complicit in such fraud. The loss of export revenue attributable to transfer pricing fraud might amount to US$ 10mi during 2005. That amount represents some 2% of Guyana's export revenue (of US$ 500 million, roughly half of which was then attributable to gold, diamonds and sugar, and a further 10% to timber)........Link
National log export policy
Public Consultation on National Log Export Policy- Summary of Proceedings (2007/02/17)
Guyana is situated on the northeastern coast of South America, in between Venezuela which lies to its west and Surinam (Dutch Guiana) on its east. Guyana has an area of 214,970 km2 of which nearly seventy-five percent is covered with natural vegetation. Of this area, approximately four fifths is classified as State Forests under the jurisdiction of the Guyana Forestry Commission (GFC).
http://www.forestry.gov.gy/
Guyana is situated on the northeastern coast of South America, in between Venezuela which lies to its west and Surinam (Dutch Guiana) on its east. Guyana has an area of 214,970 km2 of which nearly seventy-five percent is covered with natural vegetation. Of this area, approximately four fifths is classified as State Forests under the jurisdiction of the Guyana Forestry Commission (GFC).
http://www.forestry.gov.gy/
HSBC backing draws criticism
HSBC backing draws criticism
Timber Trades Journal, 12 March 2007
A London-based NGO Global Witness has blasted HSBC for helping Samling, the Malaysian-based timber firm, raise US$280m through an initial public offering on the Hong Kong Stock Exchange.
HSBC arranged the financing jointly with Credit Suisse and Macquarie Securities, but Global Witness said in doing so HSBC violated its own forestry sustainability guidelines, which say the bank will not provide financial assistance to commercial logging operations in primary tropical moist or high conservation value forest.
Global Witness campaigner Mike Davis said Samling's “bread and butter” business was logging tropical moist forest in Guyana, Papua New Guinea and Malaysia among its 4 million ha of resources, and large territories had been identified as high conservation value by the WWF.
Global Witness was among 37 NGOs from 18 countries that called on investors to shun Samling. HSBC did not comment.
Link
Timber Trades Journal, 12 March 2007
A London-based NGO Global Witness has blasted HSBC for helping Samling, the Malaysian-based timber firm, raise US$280m through an initial public offering on the Hong Kong Stock Exchange.
HSBC arranged the financing jointly with Credit Suisse and Macquarie Securities, but Global Witness said in doing so HSBC violated its own forestry sustainability guidelines, which say the bank will not provide financial assistance to commercial logging operations in primary tropical moist or high conservation value forest.
Global Witness campaigner Mike Davis said Samling's “bread and butter” business was logging tropical moist forest in Guyana, Papua New Guinea and Malaysia among its 4 million ha of resources, and large territories had been identified as high conservation value by the WWF.
Global Witness was among 37 NGOs from 18 countries that called on investors to shun Samling. HSBC did not comment.
Link
Monday, March 12, 2007
Barama sets up new company
Barama sets up new company for value-added timber processing
By Johann Earle
Monday, March 12th 2007
Barama Company Limited is gearing up for value-added timber processing with the establishment of a US$6 million sister company to focus on downstream production of wood-based products including furniture and houses for the local and overseas markets.
The new company has submitted its draft environmental study to the Environ-mental Protection Agency (EPA) for approval and the EPA has invited the public to review the Environmental Impact Assessment and make written submissions within 60 days from the publication of the notice. These submissions will help guide the decision either for or against the granting of an Environmental Permit for the project.
Barama Housing Inc (BHI) a locally registered private limited company wholly owned by Samling Strategic Corporation of Malaysia is the sister company to Barama Company Ltd (BCL).
According to the EIA draft, the proposed project site is an area of State Forest that is 47 314 ha, approximately 116 915 acres, located on the Right Bank Cuyuni River, Left Bank Waiarimpo River, Left Bank Ekabago River, Region 7 and bounded to the North and North-West by the Cuyuni River.
The report said the principal objective of the project is the production of timber to supply downstream processing to wood-based products. "BHI intends to invest US$6 million and to generate 25 jobs during the construction and mobilization phase and 149 during the operational phase," the document said.
The key question likely to be raised by this move is why Barama needs another forest concession for value-added processing when it has millions of acres in the north west.
To guide its activities and investment, BHI has commenced the preparation of a five-year Forest Management Plan for submission to GFC. "Based on this plan, Annual Operation Plans will be prepared to coordinate the forestry operations in detail taking into account immediate market opportunities and the species production schedule. BHI intends to harvest all merchantable timber species though it is generally believed that four major species, Baromalli, Greenheart, Purpleheart and Mora are likely to form the bulk of harvested species from the project area," the document stated.
As part of the permitting process, and in order to secure the Timber Sales Agreement (TSA) BHI was required by the EPA to conduct an Environmental and Social Impact Assessment Study of the project. In June 2005, BHI appointed Environmental Management Consultants (EMC) as the independent consultant to undertake the study.
The draft document said the objectives of the study were to document the physical, ecological and socio-economic baseline conditions of the study area and to inform, obtain and address contributions from stakeholders including relevant authorities and the public.
It also hopes to assess in detail, the environmental and social impact that would result from the project, identify mitigation measures that would reduce the significance of predicted negative impacts or enhanced predicted benefits of the proposed project and develop an Environ- mental Management Plan and appropriate Monitoring Plan for the proposed project including a Conceptual Closure Plan.
The draft report said that as part of its mandate, the Guyana Forestry Commission has been encouraging sustainable forest operations for the promotion of social and economic development while at the same time safeguarding the integrity of forest resources.
"Barama Housing Inc. has responded to this effort by GFC to implement a project based on a sustained yield management program and to operate in accordance with GFC's Code of Practice for Forest Operations. The company intends to adopt best practice approaches in its operations which could eventually lead to forest certification," the report said.
It said too that BHI is in the advanced stages of acquiring its 47,311 hectares forest concession. It said that the forest concession contains viable standing volumes of commercial timber and other forest resources. "BHI intends to manage these resources on a sustainable basis for the production of timber and wood-based products thereby creating socio-economic benefits for Guyana and its people," the draft said.
Potential
environmental impacts
According to the draft report, threats to the environment could come from pollution to water systems from fuels stored for the operation of the project. It said that there could be reduction in certain species and the increased risk of soil compaction and erosion.
In terms of wildlife, the document cited disturbance from human activities associated with forestry activities. Increased human activity could also lead to increased levels of hunting, the study concluded.
According to the draft study, BHI in its operations will be expected to adhere to and comply with the GFC Code of Practice for Forest Operation and the principles of Reduced Impact Logging. "As is customary with forest operations of this nature, GFC will be expected to permanently station a Forest Officer at BHI's operations to monitor compliance against these and other GFC requirements," it said.
The company's Manage-ment and Mitigation Plan identifies activities to be undertaken in an effort to lessen the principal adverse effects envisaged from this project. The draft said the plan describes the way in which the main environmental impacts of the BHI project can be managed, and prescribes appropriate mitigation measures to be adopted during the mobilization phase as well as the operational life of the project.
It said that specific mitigation actions have been identified for the logging operations within the BHI concession area as well as at Pine Tree Landing, where the downstream activities will be done.
The draft report said that based on the principal issues and impacts identified during the study, and the mitigation measures for implementation, a number of parameters are to be monitored during the operations of the project.
The draft report said that of the total concession area, approximately 39,830 ha (85 per cent) is classified as productive for the purposes of timber harvesting. Of the total area, 2,129 ha (4.5 per cent) will be set aside as biodiversity reserves where no logging activity will occur.
It said that for the purposes of planning a sustainable management regime a logging period of 15 years is currently proposed, followed by a 25-year fallow period making a total cycle of 40 years, though this is subject to approval by the GFC.
List
By Johann Earle
Monday, March 12th 2007
Barama Company Limited is gearing up for value-added timber processing with the establishment of a US$6 million sister company to focus on downstream production of wood-based products including furniture and houses for the local and overseas markets.
The new company has submitted its draft environmental study to the Environ-mental Protection Agency (EPA) for approval and the EPA has invited the public to review the Environmental Impact Assessment and make written submissions within 60 days from the publication of the notice. These submissions will help guide the decision either for or against the granting of an Environmental Permit for the project.
Barama Housing Inc (BHI) a locally registered private limited company wholly owned by Samling Strategic Corporation of Malaysia is the sister company to Barama Company Ltd (BCL).
According to the EIA draft, the proposed project site is an area of State Forest that is 47 314 ha, approximately 116 915 acres, located on the Right Bank Cuyuni River, Left Bank Waiarimpo River, Left Bank Ekabago River, Region 7 and bounded to the North and North-West by the Cuyuni River.
The report said the principal objective of the project is the production of timber to supply downstream processing to wood-based products. "BHI intends to invest US$6 million and to generate 25 jobs during the construction and mobilization phase and 149 during the operational phase," the document said.
The key question likely to be raised by this move is why Barama needs another forest concession for value-added processing when it has millions of acres in the north west.
To guide its activities and investment, BHI has commenced the preparation of a five-year Forest Management Plan for submission to GFC. "Based on this plan, Annual Operation Plans will be prepared to coordinate the forestry operations in detail taking into account immediate market opportunities and the species production schedule. BHI intends to harvest all merchantable timber species though it is generally believed that four major species, Baromalli, Greenheart, Purpleheart and Mora are likely to form the bulk of harvested species from the project area," the document stated.
As part of the permitting process, and in order to secure the Timber Sales Agreement (TSA) BHI was required by the EPA to conduct an Environmental and Social Impact Assessment Study of the project. In June 2005, BHI appointed Environmental Management Consultants (EMC) as the independent consultant to undertake the study.
The draft document said the objectives of the study were to document the physical, ecological and socio-economic baseline conditions of the study area and to inform, obtain and address contributions from stakeholders including relevant authorities and the public.
It also hopes to assess in detail, the environmental and social impact that would result from the project, identify mitigation measures that would reduce the significance of predicted negative impacts or enhanced predicted benefits of the proposed project and develop an Environ- mental Management Plan and appropriate Monitoring Plan for the proposed project including a Conceptual Closure Plan.
The draft report said that as part of its mandate, the Guyana Forestry Commission has been encouraging sustainable forest operations for the promotion of social and economic development while at the same time safeguarding the integrity of forest resources.
"Barama Housing Inc. has responded to this effort by GFC to implement a project based on a sustained yield management program and to operate in accordance with GFC's Code of Practice for Forest Operations. The company intends to adopt best practice approaches in its operations which could eventually lead to forest certification," the report said.
It said too that BHI is in the advanced stages of acquiring its 47,311 hectares forest concession. It said that the forest concession contains viable standing volumes of commercial timber and other forest resources. "BHI intends to manage these resources on a sustainable basis for the production of timber and wood-based products thereby creating socio-economic benefits for Guyana and its people," the draft said.
Potential
environmental impacts
According to the draft report, threats to the environment could come from pollution to water systems from fuels stored for the operation of the project. It said that there could be reduction in certain species and the increased risk of soil compaction and erosion.
In terms of wildlife, the document cited disturbance from human activities associated with forestry activities. Increased human activity could also lead to increased levels of hunting, the study concluded.
According to the draft study, BHI in its operations will be expected to adhere to and comply with the GFC Code of Practice for Forest Operation and the principles of Reduced Impact Logging. "As is customary with forest operations of this nature, GFC will be expected to permanently station a Forest Officer at BHI's operations to monitor compliance against these and other GFC requirements," it said.
The company's Manage-ment and Mitigation Plan identifies activities to be undertaken in an effort to lessen the principal adverse effects envisaged from this project. The draft said the plan describes the way in which the main environmental impacts of the BHI project can be managed, and prescribes appropriate mitigation measures to be adopted during the mobilization phase as well as the operational life of the project.
It said that specific mitigation actions have been identified for the logging operations within the BHI concession area as well as at Pine Tree Landing, where the downstream activities will be done.
The draft report said that based on the principal issues and impacts identified during the study, and the mitigation measures for implementation, a number of parameters are to be monitored during the operations of the project.
The draft report said that of the total concession area, approximately 39,830 ha (85 per cent) is classified as productive for the purposes of timber harvesting. Of the total area, 2,129 ha (4.5 per cent) will be set aside as biodiversity reserves where no logging activity will occur.
It said that for the purposes of planning a sustainable management regime a logging period of 15 years is currently proposed, followed by a 25-year fallow period making a total cycle of 40 years, though this is subject to approval by the GFC.
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