Minority veto

The decision of Sithe Global to withdraw from the Amaila Falls Hydro Electric Project (AFHEP), because the government failed to obtain the approval of the A Partnership for National Unity (APNU) in Parliament on two bills concerning the project, amounts to a minority veto on the development of Guyana.
APNU executive Carl Greenidge identified Sithe’s concern when he pointed out that the company was concerned about the impact of “political risk” on its projected US$150 million investment.
Greenidge proposed, “This government – you can’t guarantee that it will be there for 20 more years. Even less likely, the chances are that they might not even serve out their term. The problem is if a new government comes in, they will look at a project like this, which is controversial, and they may wish to revisit the financing. That’s what Sithe recognises.”
What Greenidge did not spell out precisely is that if Sithe’s concern is about a possible new government reversing the financial arrangements, they would be actually concerned about the intentions of APNU/People’s National Congress (PNC). They are the only political party other than the People’s Progressive Party/Civic (PPP/C) in Guyana, which has a possibility of securing office – remote as that possibility might be.
Sithe would not have made such an assessment after spending so much time and effort over AFHEP if it did not have some hard information on the thinking of APNU/PNC of this matter. As the majority equity partner with the government of Guyana on the ‘Build, Own, Operate and Transfer’ (BOOT) project subsumed under the Special Purpose Vehicle (SPV) Amaila Falls Hydro Inc (AFHI), Sithe would obviously be concerned with the overall political risk that the local situation presented.
While political risk is measured by a large number of variables involving external and internal factors, the government, important local players – it is now clear that the internal factors that includes the opposition and their intentions, loomed much larger than anything else and were deemed unacceptable. It should be noted that Sithe and the entire project had already been protected by insurance that cost over US$55 million. The question that arises is what was it about APNU/PNC’s position that made Sithe take such a drastic step as walking away from a deal such as AFHEP.
It could not just be the possibility that the government could change and alter the contracts: this process is, after all, subject to an international environment that should give pause to extreme action. The PNC had made Guyana into an international pariah once when they refused to honour their obligations to the International Financial Institutions (IFIs) in the 1970s. We do not believe they want to go down that road again.
What is more likely is that Sithe would have concluded that APNU/PNC does not stand a chance of regaining power, and they would resort to an internal destabilisation plan that would put the entire AFHEP at risk. They would have seen how far the PNC was willing to go at the turn of the millennium when they supported the attacks on the state and innocent citizens by marauding gangs based in Buxton. They would have seen how the PNC was willing to cut off the interior of the country from the coastland, during the Linden protests they organised along with their junior opposition partner.
In addition to the strangulation of traffic into the interior, massive acts of vandalism and arson were committed on infrastructure and businesses. Not coincidentally, that protest was over the rationalisation of electricity tariffs for the community of Linden. How farfetched would it be for Sithe to conclude that, in any future disagreement over government policy, on electricity rates or another area, the APNU/PNC would resort to similar acts of sabotage against the electrical transmission lines from AFHEP or indeed, AFHEP itself.
Based on such an assessment, Sithe conferred a “minority veto” to APNU/PNC.