Kenana- Kingdom of Green Gold
Both authors have been intimately involved with the Kenana Sugar Farm project for many years. Osman el-Nazir, the company's Managing Director since 1981, first joined the project as a representative of the Sudan government in 1973. The same year Govind Desai was seconded from Lonrho's Zambia operations. From 1981 to 1994 he was the company's Financial Controller.
The extraordinary story of the Kanana project (see African Business May, 2001) began from a concept of Sudan's then president, Gafaar Mohamed Nimeiri. His dream was to reverse desertification, green the desert, and provide a 'bread basket' for the region.
Through his foreign investment advisor, Dr Khalil Osman Mahmoud, he met 'Tiny' Rowlands, then head of the Lonrho group of companies. It seems an immediate rapport was established between the capitalist entrepreneur and the soldier-politician President. Initially Rowlands was interested in the potential of Sudan's textile industry.
Later, when President Nimiery suggested the sugar project and Lonrho completed an initial survey, Rowlands was convinced of its economic viability. Few others shared his opinion, even within Lonrho's own boardroom. Lonrho had some experience of sugar farming in Africa, with estates in Malawi, Swaziland, South Africa and Mauritius, but nothing approaching the ambitious scale of the Sudan project.
A rocky beginning
From the outset, finance to get the mega-project off the drawing board was a problem. Geopolitical developments scuppered an initial finance package arranged with the US Exim Bank for US-manufactured factory equipment. The package was aborted following the US government's 1974 withdrawal of diplomatic recognition, a direct result of President Nimeiri's commutation of life-sentences imposed on PLO activists who had killed the US ambassador in Khartoum the previous year.
Meanwhile, the estimated start-up costs had shot up from $150m in 1973 to $250m in 1974. Negotiations with the British government's ECGD also fell through. Lonrho, anxious not to extend its already high debts, sought partner investors.
Through Lonrho's endeavours, and assistance from Dr Khalil's Gulf Int group, Nissho-Iwai Corp of Japan was brought in to supply equipment.
The Sudan government committed to a loan of $50m in 1975, and finally Kenana Sugar Co Ltd was incorporated on 11 March 1975. As Kenana's capital costs continued to escalate, Lonrho itself estimating a figure of $600m by the time Kenana got into full production some time early in the 1980s, further finance had to be found. The Kuwait Government and the Kingdom of Saudi Arabia both extended soft-loans and subscribed to equity.
Plants construction
The financing of the project is an epic tale in itself but an equally fascinating story is told of the plant's construction beginning with the challenge of co-ordinating a local labour force with the specialists of 37 nationalities speaking 30 different languages. To build the largest integrated sugar project in the world - factory, power plant, pumping stations and 300kms of irrigation canals, a total of 72,000 tons of material was hauled to the construction site.
The entry point for sea-freight imports was Port Sudan, 1,200kms northeast of the site. Kenana established its own clearing and handling operations at the port, buying five mobile cranes and developing its own laydown area which is today, post-construction, its sugar export warehouse complex.
Air freight was handled at Khartoum airport, Kenana owning and operating a Dakota DC3 and a Cessna 404 to provide daily passenger and freight flights between Kenana, Khartoum and Port Sudan.
The existing one-metre gauge single-track railway that ran from Port Sudan via Khartoum to the Kenana site was upgraded, and 50 flat rail-wagons were leased from the national railway company. Kenana also purchased bladder-tanks, each capable of holding 8,000 gallons of fuel, water or other liquids, loaded on conventional half-covered rail wagons.
Much of the out-of-gauge' heavy, bulky and awkward materials had to be hauled overland. During the dry season, 'heavy-lift' convoys would take some 18 days to complete the journey from Port Sudan to Kenana. Multi-truck convoys - comprising of a mobile workshop, a cook's galley for the crews, and fuel and water tankers - would be led by a motor grader to level, and widen the rough narrow tracks and roads. A light aircraft was kept on stand-by for emergencies.
Today, except for the Sudanese government itself, Kenana is the country's largest employer and supports an estimated 100,000 people. Kenana's mega-agricultural project success story has confounded its early critics. The complexities of one of Africa's biggest business stories is told in this detailed yet highly readable account.
CONTENTS:
Map of Sudan --
Map of Kenana Estate --
The Kenana Story --
The Early Years --
The Feasibility Study --
Revision of the Feasibility Study and Founder Members --
Further Financing Efforts --
The Project --
Project Period Management, 1975-80 --
Pre-production Progress...and Hazards --
Prelude to Full Production --
Factory Operation in the Mid-1980s --
Commercial Operation: Problems and Industrial Relations --
Keys to Kenana's Success --
Social Factors and Special Services --
The People Who Were Originally There --
Kenana's People Today --
Roles of the Major Shareholders --
Bringing the Water --
Planting the Cane --
New Extension Project --
Harvesting: Hectic Days and Nights --
Workshop Activities --
Manpower Training --
Satellite Offices --
The World Sugar Industry and International Marketing --
Financial Records --
Contractors' and Consultants' Claims and Counterclaims --
Fixed Asset Revaluation --
Project Costs and Escalation --
Project Capital Cost Track (Estimates vs. Actuals) --
Share Capital and Project Financing --
Sudan: History, Ancient and Modern --
Consultants and Contractors --
Kenana Sugar Company Key Appointments --
Some Facts and Figures about the Kenana Project --
Chronology of Main Events --
Movements of Exchange Rate, Sudanese Pound to US Dollar, 1975-98 --
Kenana's Annual Production --
Kenana's Operations and Financial Summary 1983/84-97/98 --
Share Capital --
World Sugar Prices 1960-98.