Nov 16, 2012 News
– says “abiding concerns persist”
With several deadlines already missed, and lingering questions about its final cost, the government is jittery about the construction of the road to Amaila Falls where a mega hydro power plant is to be constructed.
“Abiding concerns persist,” was the frank appraisal of Dr. Roger Luncheon when asked yesterday about the road project. He had earlier said that the road could be completed by mid next year.
Luncheon said he could not convey “how concerned” the government is about the road project, since it is critical to the construction of the hydro power plant. The plant, expected to cost close to U$1 billion, is being trumped up by the government as the project that will not only bring down electricity costs for ordinary citizens but also offer cheap and clean energy to investors.
Luncheon said yesterday that “all efforts” are being spent to ensure that the road is completed by the time financial closure for the power plant is reached.
He said that once financial closure is reached it is hoped that the road would be completed so that the contractor of the plant “could start rolling equipment off the wharf” to start construction.
Several contractors are involved in constructing the road, through contracts that were assigned in “lots.”
The Amaila Falls Hydro (AFH) Project reached major milestones in September, with the signing of key project agreements in Xi’an, China.
The Engineering, Procurement & Construction (EPC) contract, valued at US $506 million, was executed by AFH and China Railway First Group Co, Ltd. (CRFG). Neither Guyana Power & Light Inc. (GPL), nor the government is a signatory to the EPC contract. AFH, as owner of the Project, has the contractual obligation to build and finance the construction of the plant, then sell the power to GPL, pursuant to agreements to be entered into with GPL and the government.
The Investment Agreement, governing the fiscal arrangements and certain legal obligations related to CRFG’s activities in Guyana with respect to the Project, was executed by CRFG and the Government of Guyana.
The Mandate Letter, an agreement that formally initiates the documentation and due diligence phase related to the planned participation of the Inter-American Development Bank (IDB) in the financing Project, was executed by AFH and IDB.
On January 12, the government cancelled the controversial contract that was won by Synergy Holdings under the Bharrat Jagdeo presidency.
The new Donald Ramotar government terminated the contract from Fip Motilall’s Synergy Holdings and moved to seize all of his equipment. The government further determined that the contractor will pay US$120,000 in liquidated damages.
Luncheon had previously indicated that even if costs are recovered maximally from Synergy Holdings, the cost will still be more than the original contract sum.
The project site is located on the Kuribrong River, a tributary of the Potaro River in West Central Guyana. The nearest point of access is the airstrip at Kaieteur Falls on the Potaro River, approximately 15 miles to the south.
An overland trail exists from Kaieteur to Amaila. Access is also provided overland by an all-weather road through Tumatumari on the Potaro River and on to Mahdia and Kangaruma.
River access along the Potaro-Kuribrong Rivers to the foot of Amaila Falls involves several portages around rapids and waterfalls.
The road from Tumatumari was recently extended to Mahdia/Kangaruma that brings the project closer to the site, but approximately 30 miles of additional roads needed to be built to the top of Amaila Falls.
The Government of Guyana had granted the road building contract in March 2010.
The then Bharrat Jagdeo government had vociferously defended the contract given to Motilall and his company, Synergy Holdings, and refused to terminate the contract, despite mounting controversy over Motilall’s suitability and ability to complete the contract.
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