The government is to establish its own sugar plantation to produce more than 100,000 tonnes of sugarcane per annum to the feed the Komenda Sugar Factory.
As a result of this, the Ministry of Finance is seeking Parliamentary approval for a credit facility of US$ 24.54 million from the Exim Bank of India to finance the development of an irrigation system, and also facilitate the cultivation of sugarcane to feed the factory.
The facility which will attract an interest rate of 1.50 per cent per annum has a grace period of five years, and a repayment period of 20 years, is expected to support the development of sugar plantation by the company and also extend support to out-growers to help produce sufficient sugar for the factory.
This was contained in the report of the Parliamentary Select Committee on Finance on the credit facility.
The Minister of Trade and Industry, Mr Ekwow Spio-Gabrah, explained to the committee that in the absence of this arrangement, the factory would be compelled to rely solely on local sugarcane producers for raw materials, adding that the production currently available could only supply about 30 per cent of the factory’s raw material requirements.
He said the factory would rely on supplies from about 100 km radius covering parts of Western, Eastern, Volta, Greater Accra, and the Central regions for its raw material needs.
Komenda Sugar Factory
As part of efforts by the government to revive the sugar industry in Ghana, it secured a US$ 35 million from the Export-Import Bank of India for the construction of a 1,250 TCD capacity white sugar plant with 1.0 megawatt surplus power in the Komenda Edina Eguafo Abirem Municipality.
Ghana imports substantial quantities of sugar for both domestic consumption and industrial use. In 2013, sugar remained the eighth most valuable imported commodity and the fourth largest food import after rice, fish and poultry.
Sugar consumption is also rapidly growing and in recent years. Ghana has spent more than US$ 200 million per annum on importing about 200, 000 tonnes of sugar. Sugar consumption is estimated to rise to more than 800,000 tonnes by 2023 and within the broader ECOWAS sub-region, sugar is also a large net import.
In order to meet this growing demand through domestic production, the Komenda Sugar Factory was revitalized with the support of the Indian Exim bank.
However, following the completion of the factory, there is the need for the irrigation and plantation component to be expeditiously developed to ensure the availability of sugarcane in the required quantities for effective and efficient factory operations and reliable supply of sugarcane.
This is why that government has entered a new credit facility agreement with the Indian Exim Bank to support the production of sugarcane to feed the factory.
Operation of the factory
On the current state of the factory, Mr Spio-Garbrah, explained that after the commissioning of the factory, there was the need to test run it to ensure the robustness and integrity of the various components before full scale commercial operations, adding that the test run lasted for three months.
He said during this period, several thousands of tons of sugarcane purchased from local farms were crushed and about 500 bags of sugar were produced.
He explained that just like many sugar factories across Africa, the factory was currently not in operation because the sugarcane was out of season.
The Minister also pointed out that the factory had already entered a purchase agreement with several local producers to supply them with sugar can during the coming harvest season.
This arrangement he said would ensure the factory remained operational pending the coming on board of the sugarcane plantation.
He assured the committee that the necessary arrangements had been put in place to ensure that the factory comes back to full scale operations this month.