Hydro project cost includes unaccounted US$200M
Chartered accountant Christopher Ram has questioned Sithe Global’s stated intention to put US$200 million into the Amaila Falls Hydro-Electricity Project in western Guyana.
For Ram, the cost for the two main components of the project leaves a huge amount of money not properly unaccounted for, given the touted cost of the project.
Sithe Global is estimating that the project will cost between US$650M and US$700M.
Sithe Global is the developer of the hydro electricity project at Amaila Falls. The company lists itself as an international development company engaged in the development, construction, acquisition and operation of electric generation facilities in attractive markets around the world.
Last week, the company’s Senior Vice President, James McGowan, said that he was guaranteeing that the project will be built in three and a half years and will cost no more than US$700 million.
The Amaila Falls Project consists of two components. The first component is the building of the hydro electricity plant. McGowan said this will cost an estimated US$320 million, calculating at an estimated US$1,900 per kilowatt. The project is now expected to generate 165 kilowatts.
The second component of the project would be the installation of a transmission line to relay the electricity generated at the plant to power stations in Linden and at Sophia in Georgetown.
The line will be 270 kilometres and will form the backbone of the new grid system, McGowan stated. He said this project will cost US$130 million.
This means that the construction cost of the plant and the installation of the transmission line would amount to US$450 million.
McGowan had said that other “soft costs” mainly related to “project financing and development costs” add up to form the final project cost.
It therefore goes that the “soft costs” McGowan spoke of would amount to between US$250-300 million.
“When you look at the numbers, there is a big gap,” Ram stated.
“It means Sithe may not be putting in any money, that it might be their own fees,” Ram stated.
He said that Sithe Global is involved in putting projects together for which they expect to have massive returns and it is possible that that very large cost is some kind of interest or promoters’ fees payable to Sithe “that nobody is being told anything about.”
“I think there is close to US$200 that we need to have accounted for,” Ram emphasised.
However, when key project costs are subtracted, some US$150M would remain to cover costs that are not properly explained.
Ram feels that this could very well end up in Sithe Global’s pocket and inflate the sum the company has said it will invest in the project. He fears that the project has a political dimension to it that could end up costing Guyanese taxpayers.
“President Jagdeo wants to have inked and signed hydro electricity before he goes, so he doesn’t give a hoot how much it costs….”