GVL Outlines Challenges, Experienced Significant Loss in 2022

GVL Outlines Challenges, Experienced Significant Loss in 2022

Monrovia -Oil palm developer Golden Veroleum (Liberia) Inc. (GVL) says it has experienced significant losses driven mainly by the high cost of materials imported into the country. The ailing economy and global price increases poses serious challenges to the company’s operations in Liberia.

GVL signed a concession agreement with the government of Liberia to develop 220,000 hectares of land with oil palm in South-Eastern Liberia but the company has only developed a little over 19,000 hectares since 2010 due to multiple challenges.

The global economic situation, prolonged COVID19 related restrictions and the conflict in Ukraine continues to pose significant challenges to GVL’s operations mainly as a result of significant price increases in fuel and other supplies.

The Company imports fertilizer, lubricants and other equipment into Liberia to support its operations.  GVL spent over USD$5 million in 2021 and over USD$12 million 2022 for essentially the same quantity of materials.  This constitutes a 64% increase in expenditure.

Contributing to the operational difficulties, the road from Buchanan, Grand Bassa County towards the ITI Bridge has been severely damaged during the 6 months’ rainy season. The resulting delay in transporting goods and other materials from Monrovia to the operation sites forces GVL to find transportation alternatives. GVL and the Ministry of Public Works are currently rehabilitating 272 kilometers of roads from Sinoe through Grand Kru to Maryland County. The project which has been going on for the past three years is being fully supported and funded by the Government of Liberia through GVL taxes.

Crude Palm Oil (CPO) is being transferred from the Tarjuowon Mill to the Bulking Station at the Greenville Port using tankers, but when the roads and wooden bridges are severely damaged between mill and bulking, the whole supply chain is completely disrupted, the mill stops processing and the estates slows down the harvesting activities. In addition, trucks get damaged and have frequent breakdowns.

GVL’s operations depends highly on fuel supply. Poor inland transportation certainly disrupts fuel supply resulting to higher logistics cost and the inability to operate at efficient capacity due to high fixed overhead cost during the six months’ rainy season.

Poor port infrastructure particularly at Harper Port affects shipping activities. During the rainy season, international vessels hesitate to berth due to rough waves along the pier, although GVL in collaboration with National Port Authority have invested to install Pneumatic Fenders to prevent vessels hitting berthing structures.

Despite these challenges, GVL continues to sustain its operations in Liberia. The company says factors that directly impact and/or undermine its operations could be addressed and mitigated with joint efforts from government and the company in the new year. The Company expects increases in production and improvement in operational efficiency by applying agronomy best practices.