The Amaila Falls project and the question of tariffs
As the National Assembly considers the 2012 Budget, including the significant proposed government contribution to the Amaila Falls Hydropower project, we have undertaken an exercise to calculate, based on publicly available information, the estimated electricity cost arising from the project. This exercise involved calculating the Levelised Cost of Electricity, a technique that factors in both capital and operation and maintenance costs, and computes a break-even figure for the plant in terms of $/KWh.
Using estimates on capital structures released recently in the media, and along with assumptions regarding capacity, distribution and transmission losses available from secondary literature, we have estimated that the break-even tariff will not be significantly below the tariffs currently facing GPL customers, especially those in the residential sector. This analysis did not consider the wider system costs of integrating Amaila Falls into the GPL system nor did it make provision for future national electricity needs. Indeed it generally adopted a best-case scenario to give a most conservative estimate of the break-even tariff.
Hence these estimates indicate that the publicised financing structure of the project would not leave the average consumer significantly better off than under the current tariff system. This is in sharp contrast to the claims being made that the Amaila Falls project would transform the Guyanese economy by offering significantly lower electricity tariffs.
We shall be presenting the findings of our exercise on April 18 at 11am at a seminar in the Education Lecture Theatre of the University of Guyana. We hope that many stakeholders will be able to attend as we shall welcome discussion from all sides on the assumptions and results of the analysis, and the possible implication that we need to proceed cautiously on the use of public resources in this project.
Tim Laing and Thomas Singh