To Justify Agreement – BR, China Union Contracts to Undergo Senate Scrutiny

Senator Cletus Wortorson, Grand Kru County Senator

Senator Cletus Wortorson, Grand Kru County Senator

By Alphonso Nyanti The Buchanan Renewables Incorporated (BRE) and the China Union Mining Company are to be quizzed by the Liberian Senate through its Standing Committee on Lands, Mines and Energy (MLE) chaired by Grand Kru County senior Senator Cletus Wortorson to provide substantial justification to that august body as to why the Government of Liberia and its citizenry should do business with them. The deliberations are slated for next week under the watchful eyes of the committee’s Chairman, Senator Wortorson. Several professionals and experts in the areas of geological and environmental sciences such as Mr. Ben Donnie, Executive Director for the Environmental Protection Agency(EPA),Eugene Shannon, current Minister for MLE, Christopher Neyor, Ex-LEC Managing Director , Justice Minister, Cllr. Philip Z. Banks, Ian Yhap, the incumbent Managing Director for the Liberia Electricity Corporation(LEC),amongst others, are to give their respective views as it relate to the roles played in the signing of the two contracts with the BRE and the China Union Company. According to the Chairman of the Committee, former Professor of Geology at the University of Liberia, Senator Wortorson, discussions will involve committee members and expected to attract some key stakeholders who are drawn from the Liberia Extractive and Transparent Initiative (LEITI), the Green Advocates, Liberia National Students Union (LINSU), as well as Liberia’s Finance Minister Augustine Ngafuan and Cllrs. T .Negbalee Warner and Alfred Brownell respectively. It can be recalled that the Government of Liberia entered into a contract with the BRE to scientifically and technologically transform old-aged rubber trees into electrical energy to help provide electricity in Liberia, while in the same vein, the China Union Company on the other hand will engage in the business of resuscitating the Bong Mining Company.

LIBCO: A Company Opting For the Better, Improving the Livelihood of Employees at All Cost

 

Mr.Harrison Sam Karnwea, Sr., General Manager of LIBCO

Recent visit of our staff to one of Liberia’s largest rubber plantations and employer in Nimba County, the northeastern part of the country, saw hundreds of Liberians making life better for themselves as a result of jobs opportunities holistically made available by the Liberia Company (LIBCO), supplementing the Liberian Government’s recently launched Poverty Reduction Strategy (PRS).

Mr. Gboo Yeanay, Estates Manager of LIBCO, one of the brains of the company

LIBCO, formerly the Cocopa Rubber Plantation Company is an American Company which 97% of its workforce are Liberians is gradually regaining its strength after years of devastation; leaving several of its multi-million dollars facilities damaged as a result of the Liberian civil war.

Mr. Stephen K. Duah, Financial Comptroller of LIBCO

LIBCO’s management team headed by Mr. Harrison Karnwea is said to be making selfless and endless headway despite its little resources, securing over 1,200 jobs opportunities for Liberians who’s “Daily Bread” is being taken care of by the company.

Mr. Joe S. Kiepeeh, the Administrative Assistant to the General Manager at LIBCO

Mr. Jesse Y. Favor Quenne, Purchasing Coordinator at LIBCO

During a tour of some portion of the company’s 25,000 acres of farm land where 8,000 acres of this number is being covered with the planting of over one hundred forty-four million and eight hundred thousands rubber trees, employees of the company and their dependents’ wellbeing is been shouldered by the company since its establishment sixty years ago.

Mr. Peter M. Saye, Chief Accountant of LIBCO

Accordingly, the owner of the company, Charles Trippe whose sole objective is to see the company forging ahead in its operations in Liberia, is exerting every effort for his entity (LIBCO) and its workforce to remain resolute in its day to day operations.

Mr. Alfred Peagan, Junior Accountant at LIBCO

Mr. Moses Gbedea, LIBCO’s Payroll Supervisor

Mr. Mark Nyanway, Computer Operator

During the tour of the plantation by this writer under the guidance of the Plantation’s Estate Manager, Mr. Gboo Yeanay, it was observed that some of the damaged infrastructures of the company have gone under massive renovation through the administrative ingenuity of the current management team of Mr. Karnwea.

One of the many school buildings of the Plantation

The Karnwea’s well grounded administrative team has indeed given a complete facelift to the company’s damaged facilities, and also making available those basic social benefits for the entire workforce of the company including free education and health.

Some of the newly built residence for LIBCO’s Tappers

Some of the tappers being interviewed by Mr. Brooks

The reconstructions and renovation of the company’s damaged homes for ordinary employees and bungalows for senior and junior staffs proved that the LIBCO management is doing everything possible to restoring the company’s pre-war status.

Each of the nine camps of the company visited during the writer’s tour showed the efforts being applied by the management team to keep the hopes and aspirations of the company’s alive with the financial and moral support of Mr. Trippe, the Chief Executive Officer of the company.

Students of the Company seated at their classes

During the tour of the company’s sponsored academic schools and clinic, every aspect of facilities observed were in perfect tact, while students of all age groups were also seen neatly seated in their respected class rooms listening to their instructors.

Some of the students and instructional staffs who spoken to this writer lauded countless number of praises on the LIBCO’s current management team for its tireless efforts in keeping the wheel of learning at the plantation alive.

“We are grateful to the management team of this company for making sure that our children are kept in schools, and providing also us with free health facilities…..we’re indeed grateful”, an employee and parents of one of the pupils in an interview with this writer joyously stressed.

The company’s health institution which cater to employees and their dependents in the plantation were seen attending to free medical care, while others stood in queue for their free medication by the clinic’s staff.

Also as one of its social responsibilities, the LIBCO management has constructed a market building at one of its camps, empowering women and other family members of employees of the company subsidizing the efforts of their respective breadwinners of the family.

The LIBCO’s management in its drive to keep everyone of its employees and dependents closer to God has built a Church, the United Liberia Inland Church where most of them who are Bible believing Christians go to worship.

In an exclusive interview with the General Manager of the Company, Mr. Harrison Sam Karnwea, Sr.,the goal of his company is to establish a 65,000 acre “world class” Rubber Center in Nimba County.

He said Cocopa will be rehabilitated, doubled in size and structured as a base to support the development of a 50,000 acre “CoFarm Program” establishing 200 acre local farms. These Libco projects when fully developed might involve an aggregate investment of $95 million.

He said They will directly employ 12,000 individuals and improve the living standards for more than 120,000 Nimba residents and contribute in other ways to Liberian economy. The following proposed programs to accomplish this goal, outlined below, are respectfully submitted for your consideration:

He further disclosed that his company needs about $2.0 million + $1.0 million for “start-up”,This initial project, already underway, will up grade existing facilities and equipment, repair war damage and expand the nursery and facilitate the launch our planting program. We expect to complete this by March of 2009.

Mr. Karnwea told this writer, COCOPA RUBBER planting $17.0 million, this expansion program to commence in 2009, would double the present acreage under cultivation by clearing and planting an additional 8,000 acres.

In addition approximately 4,500 acres of older trees will be replanted. Land use plans will be developed to achieve this expansion within the total 25,000 acre Cocopa concession area working in a collaborative manner with the local villages to provide areas for their crops.

He further made the disclosure of a $15.0 million factory for the comnpany, adding, “The new factory would be built on the foundations of the “new” Cocopa Factory completed in 1990 but badly damaged during the war.

The second new factory might initially cost $ 6.0 million and eventually perhaps $9.0 million more to handle the expansion required to process the CoFarm Rubber The goal would be an efficient factory serving more than 75,000 acres of rubber production in Nimba County utilizing as was done in the past the railroad line for a reliable, low cost, secure transportation to Buchanan.

The goal would be to plan and set aside an appropriate area, separate from the Plantation agricultural activities, which over time would enable the establishment of secure orderly planned community.

LIBCO would manage the development, construction and leasing to shops selling clothing, shoes, building supplies, for a nurse or medical facility, a motel, food store/restaurant, gas station, auto repair, perhaps a bank and eventually a town park with an area designated for a High School and athletic fields.

Also a later phase could provide for a community park and housing for families who do not live or work on the plantation. Investment in streets and facilities might total $5.0 million in 10 years, more lately as demand increased.

He said CoFarm Program would accelerate the need for and the development of this small area of Cocopa as a commercial Town Center.

Rubber Farms for Nimba Farmers on 50,000 acres – $70 million
This project would become LIBC0’s primary focus in Nimba County

Cocopa Base:
LIBCO would manage the project using Cocopa as the base for the CoFarm Project providing everything which individual CoFarmers might reasonably need in addition to their local farm labor to establish an efficient 200 acre farm.

Cocopa’s support activities would account for more than half of the cost of establishing these farms. Libco charges would cover its costs in developing and managing the project without any markup or profit or corporate overhead or return on shareholders investment. It would however, receive a small share of the farm output in parallel to that received by the local farmer and the development bank in repayment for its loans.

Libco would arrange the financing and manage the entire project in coordination with Nimba County and the Ministry of Agriculture. Cocopa would specifically provide the following services to the individual farmer.

Class room and on-the-job Management Training Courses

Development and Engineering Services to select and plan each Parcel and each CoFarm including essential access roads

Coordination with local authorities on relocation programs for
existing occupants in areas being developed for Rubber Farms

Heavy Equipment for clearing the land and building access roads

Nursery Planting Material as well as fertilizes, chemicals, etc.

“Coaching Assistance” for CoFarmers during planting and immature phases.

Objective Periodic Reports on the progress and any suggested
remedial action for the CoFarmer and for the Bank.

CoFarmer Selection

Success of the program depends on the entrepreneurial motivation, technical rubber skills, leadership and other personal qualities of each CoFarmer. The CoFarmer needs to be a Nimba resident who has already demonstrated responsible proactive leadership in rubber farming or in some other administrative capacity. He or she needs to have a basic education and the capacity and interest in learning, personal drive, willingness to work long hours and the patience to deal with and resolve problems.

Selected CoFarmers will have the opportunity to substantially improve their family’s life style and become one of the prominent citizens of Nimba County.
An intensive, pro-active management training program and a competitive, harshly objective selection process is appropriate. Initially perhaps 15 CoFarm candidates would be accepted into a year long informal “management training course consisting of both class room and a series of “on-the-job” functional training such as- – – tapping, head man, collection, camp management, education, store room, simple PC accounting, personnel, etc. Some compensation for the candidate may be appropriate. Perhaps two thirds or ten of the graduates would be selected as CoFarmers. The others would probably find better jobs elsewhere in the rubber industry.

After the informal Management Training program has run for sever years, consideration will be given to establishing at Cocopa a formal year long Rubber Management Training Course, perhaps a program qualifying for external USAID type support geared to training approximately forty “mature” management quality students for a six month program. Half of which might proceed with the CoFarm program and half for jobs in other Rubber operations.

CoFarm Structure

A long range commitment to the program and to the lease of 50,000 acres is necessary to line up the financing and establish economies of scale. The CoFarm program would be implemented in phases with the leasing of separate 2,500 acre Parcels. containing land designated for the CoFarm program and appropriate for 200 acre Rubber Farms. The logic for having 2,500 acre Parcels includes:

o Parcel of approximately 2,500 contiguous acres may be located in good rubber areas without significantly impacting existing villages.

o Each Cluster can be divided into nine or ten 200 acre farms and a generous central area plus swamps and other areas not conducive to rubber farming.

o A 200 acre rubber farm is large enough to be efficient and small enough for an independent Rubber Farmer to develop and managed with approximately 40 permanent employees. Employee houses would be conveniently located on the 200 acre farm providing appropriate family living standard.

o The nine or ten CoFarmers would elect one of their group as their leader and working together, they would establish an elementary schools, medical office and other facilities in the Common Area they collectively need..

The selection and establishment of boundaries for these 2,000 acre parcels areas would be a careful process and Libco would probably require assistance from Nimba County officials. Certain villages might wish to have a CoFarm project located near their village to increase job opportunities, to improve road access or because one or more of their citizens wished to become a CoFarmer. Other parcels may be in more remote locations which may not significantly adversely impact established communities. All the areas would need to be selected and surveyed within three or four years.

Initially, one CoFarm Parcel would be released each year and subleased to CoFarmers. Thereafter the pace of release and construction of each Parcel would be increase if there was sufficient demand. Existing occupants of each Parcel would be offered various options that encouraged their “voluntary” relocation if required to free up a 200 acre CoFarm areas.

A reasonable objective might be to launch all of the Parcels with leases within a fifteen year period commencing two years after all the financing and government approvals were obtained.

CoFarmers Programs

The CoFarmer and his family would live on his 200 acre farm. Each of the 200-acre farms and a portion of the Central area would be cleared by the heavy equipment in the first year. Field preparation and planting might be spread over the next two if necessary three years. Initially there might be 20 employees on each farm.

More employees and more employee housing would be added as the rubber trees matured. Eventually the number of permanent employees might total 40 excluding part time employees. Farmers would encourage their employees to plant food crops in selected areas and initially also between immature Rubber Trees.

The farmer could borrow Development Bank funds for bags of rice, for construction material used in employee housing and certain tools including chain saws and other specified Farmers cash expenditures during the planting and mature period. (Building fancy homes on a farm hill top would have to come out of future earnings much later.)

The nine or ten CoFarmers in the 2,500 acre Parcel would elect one of their group as their leader and together they would organize in the Common Area an elementary school that would eventually be able to accommodate approximately 1200 children (40 employees per farm x 10 farms x 3 children per employee). The central area might also have an administrative building which would include a medical clinic, a shop, administrative office for an accountant and personnel clerk and the security office..

The cost of these Central facilities in part could be paid by Timber royalties associated with land clearance. The balance of the cost up to a specified amount would be financed by the Bank with the CoFarmers collectively remaining responsible for this debt to be repaid out of future sales proceeds.

On a preliminary basis, CoFarmers might require approximately $160,000 in direct financing to establish each of their 200 acre farms including management and employees housing. Including interest during the immature period. The total would come to over $200,000

Factory Processing

CoFarmers would be obligated to sell all the rubber produced on their farm to the Cocopa Factory. To optimize quality and sales proceeds, consideration will be given to re-establishing Cocopa’s Nimba Factory as a latex processing facility. CoFarm Trucks would collect the rubber daily from a convenient central location in each Parcel which had good road access. The rubber would be weighed and tested and purchased from the Farmer at a posted monthly “market back” purchase price. The processed rubber would be efficiently palletized and shipped by rail to Buchanan if possible using the same procedures employed by Cocopa in the 1980’s to produce a consistent quality product to achieve premium prices at a reasonable transportation cost.

Development Bank

An essential element of the project would be a Development Bank agreement to provide long term low interest mini mortgage loan funding for the individual CoFarmers. A three way agreement between the Bank and each CoFarmer and Libco as the Leaseholder and service provider would involve a lien on CoFarm leasehold improvements, the rubber production and sales proceeds. The CoFarmers would agree to sell all the farm’s rubber production to the Cocopa Factory and the proceeds from the sale would be deposited in the Development Bank and distributed as specified in the agreements.

Distribution of Proceeds

The sales proceeds deposited would be allocated by contract as follows;
(Numbers are preliminary):

44% to the Development Bank to applied first to repay accrued interest and then to amortized the loan.

40% to the farmer to cover his farm labor during the establishment of the Rubber Farm and in maintaining the trees and harvesting the rubber.

8% to the Common Account to reduce by a specified amount prior loan balances for funds advanced to build Common Facilities and the balance to pay current expenses and maintenance on the School, medical facilities, and security expenditures.

8 % to Libco to cover its corporate overhead and financial expenses associated with the CoFarm Project and to provide earnings for establishing and managing the CoFarm project.

After the accrued interest owed to the Bank by the CoFarmer was repaid,, the percentage of Sales Proceeds to be distributed to the bank might drop to 38 % and the proceeds to the CoFarmer might be increased to 42 %, to the Common Fund to 9 % and to Libco to 9 % .

Commission

The CoFarm Commission would be formed to facilitate the project and monitor the CoFarm and Cocopa activity.. The Commission would have the right to review and approve specific elements of the program including:

Approval of each CoFarmer recommended by Libco for a Sublease,

Review of Cocopa’s auditors report on the charges to CoFarmers.
CoFarmer’s expenditures from the Community Fund.

Proposed action dealing with a CoFarmer’s non-compliance
with an important lease term. ( CoFarmer’s sale of rubber
to another buyer to avoid paying the Bank could result in
cancellation of the Sublease.

ndividual Commission Directors would be designated by the Minister of Agriculture, the Nimba Supervisor, the LNP, the Development Bank, and by Libco. Three of the elected CoFarm leaders would attend perhaps in rotation as would three other Cocopa Managers directly involved with the CoFarm program including the Comptroller. A wise and respected Nimba citizen would be selected by the Commission Members to act as its Chairman. The Commission would meet quarterly to receive management reports, to track results, and to review and help resolve problems areas and to approve specific items requiring their approval.
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CoFarm Funding Estimates
:
Development Bank micro loans for the CoFarmers approx $40.0 million
Common Area for development of the schools etc approx $10.0 Cocopa project expenditures for the CoFarm program $10.0
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Total $60.0 million

We believe a focused company such as LIBCO is in a unique position to use its renovated and expanded Cocopa Plantation as a support base for a CoFarm Development, to arrange the required financing and to plan and manage the multiple elements and resources required to establish and implement these programs.

The CoFarm structure importantly builds on the contribution that can be made by individually qualified Liberian Rubber Farmers. It assigns Libco professionally responsibility for the managing development activities in a transparent open book way that will give comfort to the Development Bank. And it establishes a common “you win, I win” incentive mechanism for the Farmer, the Bank, the Community Services and Libco.

The Commission may provide an appropriate way to maintain compliance to the legal agreements and also keep in focus the changing interests of local communities to solve and find solutions to problems before they get out of hand.

If the Development Bank funding is available and the Government, County and local communities will support the goal of establishing a major rubber center in Nimba County, The Liberia Company will organize to achieve this goal.
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