7 January 2013

Liberia: Gov't Tight-Lipped On BR Sale

Barely a week after Buchanan Renewables (BR) announced that it has sold the entire share of the company to an investor group, the Liberian government has not made any public comment.

Last week, BR announced that an agreement has been reached for its sale. This includes its entire ownership interest in its Liberian operations to an investor group.

Terms and details of the agreement were not disclosed, and the name of the new group is yet to be revealed. However, the sale of the company includes all the assets of the fuel business and the plans for the local biomass power plant.

The Chief Executive Officer of BR Liam Hickey confirmed the sale of the company and said the new investor group is expected to take over by this week.

Closed to a week now the Liberian government has remained mummed and appears embarrassed by the latest deal.

This is the second sale of a multi-million dollar venture that appears to be characterized by questionable transactions presumably by spurious groups. A week ago, the Israeli company, Elenilto sold its remaining share to India's Sesa Goa for more than US$100 million without throwing a shovel.

When the Ministry of Information, Culture and Tourism was contacted, Deputy Minister for Public Affairs Isaac Jackson said he has no details about the development, but that he would contact the National Investment Commission (NIC) which has oversight responsibility.

When NIC was contacted, this paper was informed that the Chairman of the NIC Natty B. Davis had traveled and was expected this week.

Buchanan Renewables announced in 2009 that it planned to help Liberia's power sector by using woodchips from old rubber trees to generate 35 MW of electricity.

However, Green Advocate, an environmental group, had warned the Liberian government two years ago about the BR agreement. In a report, Green Advocate claimed that BR lacked the capacity to operate as a genuine company.

The group, led by Cllr. Alfred Brownell, an environmental expert, said the company was only exploiting the country's resources.

This report describes how the company, which presented itself as a highly sustainable venture, has a negative impact on the livelihood of a number of smallholder farmers; has not taken adequate measures to improve the energy situation in Liberia, and has a corporate structure which can be optimally used to avoid paying taxes in Liberia.

This report has assessed how a number of stakeholders have been affected by the practices of BR, and to what extent these practices reflect the socially and environmentally sustainable public image of the company. The report dealt with four specific issues; 1) the basis of BR's activities in Liberia; 2) the issues related to BR's dealings with smallholder farmers; 3) the effects of BR's activities on the local charcoal market; and 4) tax avoidance through its corporate structure.

The following points summarize the report's major findings; while proper monitoring seems to be in place to ensure the legality and the proper taxation of the woodchips prior to export through the Chain of Custody system, little or no monitoring by government institutions such as the FDA or the MoA seems to be taking place with regards to the effects of BR's operations on smallholder farmers and other stakeholders.

A number of irregularities were found with BR's process of acquiring an Environmental Certificate from the EPA. Irregularities were found with the time period of BR's activities, the types of documents on the basis of which the certificate was issued and adherence to the reporting requirements. Regarding the latter, the company indicated that all the required reports are deposited and available to the public at the EPA. However, the EPA indicated that it did not have any of these reports in its possession.

Negotiations between the Government of Liberia and BR with regards to pricing structures have caused delays in the construction of the 36MW biomass-fuelled power plant that BR Fuel intends to construct.

A number of the smallholder rubber farmers that had signed contracts with BR to sell their rubber trees now live in poverty. This is due in part to lower payments than expected or agreed upon, the destruction of the farms for further cultivation and a lack of maintenance of the farms after replanting young rubber trees.

These farmers have also complained about the dumping of rotten woodchips on their farms, which they said have attracted stinging ants to their farms.

Another pillar of BR's public image of a sustainable company is its contribution to the energy security of Liberia, making use of a domestic renewable fuel source. However, for many Liberians the energy situation has worsened rather than improved over the last years.

On the one hand, the biomass-fuelled power plant that will bring much needed electricity to Monrovia is experiencing significant delays due to negotiations between BR and the Government of Liberia. While it is beyond the scope of this report to delve into which of the two parties is mostly responsible for the delays, it is clear that the power plant will not be operational within the near future.

Large billboards announcing the power plant, which BR has put up throughout Monrovia and other parts, have created the expectation with the population of Monrovia that it will receive electricity soon.

On the other hand, that same Monrovian population remains primarily dependent on charcoal as fuel for cooking and heating. This charcoal is produced to a large extent from the same rubber wood that BR uses to produce its biomass, which is currently exported to Europe. While many different factors might have contributed to the recent price hike of charcoal, BR clearly has a role to play in addressing this paradox.

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