President Bharrat Jagdeo in seeking to explain the perceived US$200M hike in the cost of the construction of the Amaila Falls Hydro Electric Project, says that the complete cost must not be confused with the bid price.
Jagdeo was at the time speaking at a press briefing at the Office of the President where he told media operatives that since the time of the announcement of the cost for the transmission lines and the hydropower plant two years ago, inflation has made an impact.
He said that it is standard to take into account the rate of inflation when it comes to developing large scale projects.
The President said that another of the reasons for the increased figure being used in relation to the project is the fact that there is now a US$30M contingency in place. This, he said, is in addition to US$40M insurance for the loan to be procured from China Development Bank.The President said that the bank is demanding the insurance to protect its money.
The President sought to emphasize that when persons had announced the tender price it should not have been confused with the complete project cost.
He said that the CDB wants the insurance in place should anything go wrong with the project.
This insurance Jagdeo says is responsible for about 25 per cent of the increase.
Speaking of the contingency which was not in place before, the President in seeking to simplify the issue said that while this money may never be spent, it has to be in place to take into account unforeseen scenarios.
One such scenario, the President expounded, could come about in the drilling of bore-holes and the discovery of a soft patch of rocks which could cause a problem and will have to be addressed using the contingency.
This contingency, he explained, was not in the tender price when it was first announced two years ago.
“When people announce the tender price that is not the project,” Jagdeo said.
He explained that there is one cost to actually construct a project, but in the case of money having to be borrowed, then there is also a repayment interest that comes into play.
He said that the project will incur a two per cent higher interest than was anticipated two years ago.
With such a large project a mere two per cent can add tens of millions of dollars, according to Jagdeo.
“Equity is fixed, but the price of the loan changes based on interest rate,” Jagdeo asserted.
The president also reminded that even with the US$835M price tag for the project, the cost of electricity will still be reduced by about forty per cent and will hover between 11 cents and 10 cents per kilowatt hour.
The President stressed that not a cent of the money utilized, “will be going to Jagdeo or the PPP.”
Jagdeo added that the project is an equity investment, with CDB providing the loan. The reason that the administration is pushing the project is because of its future impact on the country.
“It has never been US$200M more…You only look at the bid price for the physical construction,” Jagdeo said as he explained how the additional money has been piled onto the project.
He says that the Hydropower Electric Plant even at US$835M still allows for the fixed low cost electricity in future,
“The country wins all around when the hydro is completed.”
Sep 23, 2019CPL – Guyana Amazon Warriors opened a three-point lead at the top of the 2019 Hero Caribbean Premier League (CPL) table as they extended their perfect start to the season to six matches and...
Sep 23, 2019
Sep 23, 2019
Sep 23, 2019
Sep 23, 2019
Sep 22, 2019
You need 5000 votes to get a parliamentary seat in the national election. Neither of the two leviathans (PPP, PNC) would... more
By Sir Ronald Sanders “Hurricane Hell” and “The Bahamas is at war being attacked by Hurricane Dorian. And yet The... more
Editor’s Note, If your sent letter was not published and you felt its contents were valid and devoid of libel or personal attacks, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]