With the A Partnership for National Unity (APNU) and the Alliance For Change (AFC) signalling their intention to support the Amaila Falls Hydropower Project, government is analysing possible avenues that can be taken to resuscitate the US$800 million project.
Before crumbling in 2013, the Amaila Falls Hydro Electric Project (AFHEP) was a private sector-led initiative, designed to be financed through the Inter-American Development Bank (IDB) and China Development Bank (CDB) with equity from Sithe Global Inc and the government of Guyana.
The China Railway First Group (CRFG) was identified for the construction of the facility.
Drawing board
Addressing a Parliamentary Sectoral Committee on Natural Resources on Wednesday, Guyana Power and Light (GPL) Chairman Winston Brassington said the People’s Progressive Party/Civic (PPP/C) administration went back to the drawing board following the occurrences in the National Assembly in August 2013, with the hope of resuscitating the project.
According to Brassington, CDB has pledged to pump US$500 million into the materialisation of the project with the remaining committed as well.
CDB has also indicated its willingness to pour more funds into the project to fill any gap.
Sithe Global had pulled out of the project in August 2013, two days after the National Assembly failed to meet consensus on legislative arrangements deemed necessary to move the project forward. The company had already expended approximately US$16 million on preparatory work.
On Wednesday, Brassington informed the natural resources sectoral committee that the IDB’s due diligence report was incomplete when Sithe Global pulled out. The due diligence report was funded by Sithe Global.
However, he disclosed that arrangements have been made to move the process forward, thereby having the report completed by the end of the first quarter.
“There are two possible parts: one, a Chinese-led part where they step up and fill the gap, and the other, which is depending on a lot of things happening, trying to see a way to get the existing partners to resuscitate the existing arrangement,” said Brassington.
He said if at the end of the first quarter, options with existing partners are not available, other investors are showing significant interest.
“But recognising the sustainable level of work and level it has gone into preparing this project by the existing partners, they offer a better chance because anyone coming new would have to start afresh,” he explained.
Brassington made it clear that a large percentage of the information on the Amaila Falls project is owned by Sithe Global, even though it is in the public domain. “It is not automatic; you just can’t take that, so there are those sorts of nuances that need to be considered,” he said.
IDB report
APNU Member of Parliament Joseph Harmon said the findings in the IDB report will determine whether the coalition will support the project, but expressed concerns over funding of the project by the U.S.
Prime Minister Samuel Hinds explained that American executives holding positions at the IDB, the World Bank and/or the International Monetary Fund (IMF), or any multilateral financing institutions, have been instructed not to support large hydropower projects.
He said this is a concern to the Guyana government, noting that the Amaila Falls project might not be an exception.
“I think Amaila may be caught in that number and that is a new situation… a matter of concern to us,” he stated. Nevertheless, he said government is heartened with the opposition’s move to support the hydro project.
The project was designed to be constructed where the Amaila and Kuribrong rivers meet. Electricity produced at the plant would have been delivered to Guyana’s capital, Georgetown, and its second largest town, Linden, by an electric transmission line.
Government has always argued that the Amaila Falls project would produce reliable, affordable and clean energy.
Sithe Global will own and operate the project for 20 years, after which, the project will be transferred to GPL for free, through a Build Own Operate Transfer (BOOT) arrangement.
Based on studies, an estimated 20 per cent reduction in electricity tariffs would be experience when the Amaila Falls project becomes operational, with residential consumers saving approximately Gy$208.7 million monthly or Gy$2.5 billion annually.
