US$840M Amaila Falls hydro-electric project…
Guyana will examine reduction of hefty US$55M risk insurance – Ramotar
Guyana will examine the possibilities of drastically reducing a US$55M political risk insurance cost that is attached to the US$840M Amaila Falls hydro-electrical project.
The disclosure was made yesterday by President Donald Ramotar during a press conference at his Vlissengen Road office. He is set to address the United Nations in the coming days and while in the US, will be meeting with Luis Alberto Moreno, President of the Inter-American Development Bank (IDB).
Guyana is hoping to fast-track the project, the most expensive ever in the country’s history, Ramotar said yesterday.
Questioned about the political debt insurance, which had driven the price tag of the project upwards and over which there had been concerns, the Head of State noted that while it may not be possible to totally eliminate it, there is the possibility of reducing it.
“We might have to fight for a reduction. Many of big investments…Omai (Gold Mines)…you had political risk insurance.”
He pointed out that political stability is important in the negotiations of financing of big investments.
Regarding the actual project, the President wants to construction of hydro dam to start as soon as the final agreements are signed.
The 165-megawatt project is to be built in Region Eight and according to Sithe Global, the US-based developer of the massive project, IDB will be plugging in US$175M, from the Inter-American Development Bank (IDB).
Funding for the project is coming from a number of sources including US$100M in equity from the Guyana Government.
Guyana has already committed US$15.4M for the construction of the access road as part of the equity, with the remainder coming from the LCDS initiatives including the Memorandum of Understanding signed with Norway for some US$250M.
Some 70 per cent of the total funding will be coming from the China Development Bank and the IDB. China Development Bank will be providing US$413.2M.
Sithe Global will be providing US$152.1M bringing the total project cost to US$840.3M.
The total capital costs for the project, according to the Sithe Global officials earlier this year, will be US$652.5M, taking into consideration additional construction, development, start-up, as well as a contingency.
The remaining US$187.8M will go towards financing costs which include interest during
construction (US$97.1M), lenders fee and advisory cost (US$34.9M), and debt political risk insurance (US$55.7M).
The actual construction of the hydro-electric plant will see an estimated US$519.6M in total Capital Expenditure… the plant is expected to cost US$314M, with the transmission lines demanding some US$126M. The additional US$79M is for currency adjustments.
At a projected average tariff of US$101M, the plant is expected to rake in more than US$2B over the 20-year period on the Build Own Operate and Transfer (BOOT) life of the project.
The plant is slated to last for at least 75 years.
There have been concerns over the costs of the project which have been marred already with delays in the US$15.4M access roads. The contract was taken away from Synergy Inc. early this year and awarded in parts to other construction firms.