Jul 23, 2013 News
– no evidence GPL will be able to sell 150 MW
As the debate over the US$840M Amaila Falls hydro project continues, there are some hard questions being asked over the arrangements that Government has committed to.
Under what is known as a BOOT arrangement (Build Own Operate Transfer), Guyana will be acquiring the 165-megawatt facility 20 years after it is has been commissioned and in operation. However, the deal with the Amaila hydro, in its current state, does not mesh what BOOT is all about in reality.
According to local accountant Christopher Ram, writing in his weekly business blog www.chrisram.net to describe the project, which is Guyana’s largest planned infrastructure works, as being under a BOOT arrangement, would be misleading.
Ram, a critic who has come under fire from the Government time and again for his writings, in his column over the weekend titled “Amaila Falls Hydroelectricity Project, Terrorism and Funeral”, says that he believes that the BOOT operation was a concept sold by Fip Motilall and his company, Synergy Holdings Inc., to make it more attractive to former President Bharrat Jagdeo and the Government of Guyana.
Motilall was the controversial figure who came up with the idea of the hydro facility but later handed it over to Sithe Global, a US developer.
According to Ram, in a typical BOOT project, a central or state government or authority agrees with a private sector entity that the entity will design and build some usually infrastructural project and to operate and maintain these facilities for a certain period.
“The responsibility for the raising of finance is strictly that of the private sector entity which may or may not be required to pay a royalty for the use of whatever resource or concession it enjoys under the Agreement. Indeed, under Guyana’s Hydroelectricity Act such a royalty is explicitly contemplated.”
The Amaila project, however, seems to ignore that provision. “With Government being responsible for injecting and or raising US$684M in the company and guaranteeing the sale of the entire production of Amaila, the agreement has moved a long way from being a BOOT. This is a Government-owned project for which the people of Guyana will have to wait 20 years before the country assumes ownership.”
But not only is the Government handing the facility to another entity to manage, after guaranteeing payments by the Guyana Power and Light Inc (GPL) to the managers, there seems to be no indications that GPL will be able to sell more than the 150 megawatts of power it will purchase.
“I have not heard or seen any study that gives any indication when Guyana Power & Light Inc. will be able to sell the more than 150 MW of power which it will be committed to purchase from the hydro-electricity project.”
Currently, on the coastlands, the demand is less than 100 megawatts.
More fundamentally, Ram wrote, no one seems to know how much consumers will have to pay for electricity when the project comes on stream. “Perhaps the joint opposition has not asked that question. But many other persons have, and their questions have been met with a troubling silence.
Indeed the Government has so far not acknowledged, as Sithe Global has, that with interest and other charges, the project will cost over US$2.1B.”
Last Thursday, the Opposition used its majority to vote down two Bills for the project. With accusations being leveled back and forth, President Donald Ramotar over the weekend described the vote against as akin to “terrorism” and saying the project is in jeopardy.
The Opposition, meanwhile, has been demanding more information and the passage of key legislations that will see the holding of local government elections which has been overdue for 16 years now.
Ram said yesterday, the opportunity of the rejection should be used to go back to the drawing board. “The Amaila Falls Hydroelectric Project as presently designed, instead of being the economy’s salvation, will be its albatross. We have to start by getting rid of Synergy, Sithe and the Chinese who have been pushing us to gouge us.
“The 250 MW Bujugali Hydro Project, a Sithe sponsored project was completed for US$900 million or US$3.6 million per MW. Guyana is paying US$840 million for 165 MW or US$5.1 million per MW.
“The Guyana project based on MW is 42 per cent higher. For what we are putting in, we can have our own hydroelectricity facility.”
Government says that the hydro project will reduce electricity costs for consumers and the country’s dependence on imported fuel.
The project is being built by China Railway First Group with the China Development Bank plugging US$413M in. The Government is contributing over US$100M while Sithe Global another US$100M.
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