Amaila Falls Project now set for due diligence

Another crucial piece of documentation with regards to the financing of the Amaila Falls Hydropower Project (AFH) in Guyana, the Mandate Letter, has been signed and the Inter- American Development Bank is now expected to proceed with the final phase of due diligence, with financing arrangements expected to be completed within nine months.

“The signing of the Mandate Letter between the IDB and AFH represents a critical piece of the project financing scheme. This significant step forward allows the lenders of the project (IDB and China Development Bank) to proceed with the final phase of due diligence and draft the required financing documentation.
AFH and project lenders are working hard to finish the financing arrangements while pushing the tariff as low as possible,” a statement from AFH said. “This due diligence and documentation phase is expected to conclude in nine (9) months, which is within the window of price certainty pursuant to the EPC Contract. AFH expects financial closure in the second quarter of 2013, with construction beginning immediately thereafter,” the statement added.
The statement also said that the access road is expected to be completed before the actual construction of the hydro project and that the hydro is expected to start producing renewable energy within 3.5 years. The Engineering, Procurement and Construction (EPC) contract valued at US$ 506 million along with the IDB Mandate Letter and several other agreements was signed in Xi’an, China, last week by Finance Minister Dr Ashni Singh.
“The EPC contract is valued at US$ 506 million, representing the largest infrastructure contract ever executed for Guyana. Signing the EPC contract provides price certainty, avoiding the risk of commodity price adjustments for a period of nine (9) months, during which AFH will secure the project financing. The pricing is subject to adjustment in currency fluctuation until financial closure is reached, at which time the pricing will be fixed,” the statement said.
“Sithe Global will lead the oversight of the construction activity, using its core management team which has successfully led the development or acquisition of over 70 power plants comprising more than 18,000 megawatts globally. China Railway, one of the world’s largest infrastructure construction companies with significant experience building hydropower plants, will build the power facility and transmission lines. The robust contractual requirements of the EPC contract require that the strength, structure, and integrity of the dam and associated power plant infrastructure will be of accepted international standards.
Sithe Global will closely monitor the implementation and ensure strict compliance with the standards. Further, third- party oversight will be conducted by the lender’s engineer, the owner’s engineer (MWH, one of the largest hydro engineers in the USA), as well as an independent panel of experts in dams and dam safety,” AFH added. The project represents the best low- cost, long- term option to reduce GPL’s average generation costs and dependency on imported fossil fuels.
Sithe Global believes that the final project tariff will provide substantial annual savings to GPL and the public. The project will provide a significant improvement in the electricity infrastructure in Guyana that will support the country’s overall economic growth and sustainable development, based on a reliable, affordable electrical grid for its industries, businesses, and residents.