Jul 31, 2013 News Comments Off on Amaila Hydro saga…Govt. figures show US$44M hike in price
– No reference to world average comparisons
The Amaila Falls Hydro Electric Project is now being pegged to cost US$884M as against the original US$840M.
Government on Monday attempted to discredit an article carried by this publication that compared a number of major hydropower plants against the Amaila Falls facility. One such is being built in Pakistan.
The government responded by pointing out that the US$362M price tag for the Pakistani plant did not include a transmission line, and that the Amaila Falls project includes one that costs US$155M. That figure, however, now represents a significant increase in the cost provided by the Amaila project developers—Sithe Global.
Early last year, senior executives of Sithe Global provided a detailed breakdown of the US$840.3M price tag for the project, during which it was said that the transmission line would be constructed at a cost of US$126M, a staggering US$29M less than the latest Government figures, pushing the cost to US$869.3M.
What the government did not report is that the transmission line for the Pakistan facility is not part of the project, because that it is being built by the state owned company purchasing the electricity from the plant.
Guyana Power and Light Inc (GPL) is currently undertaking a US$42M upgrade to its distribution network, but this has not been formally linked by government to the Amaila financing.
The Government described the comparison made by Kaieteur News as ‘apples and oranges’, given that the Pakistani project does not include an access road.
But it has now admitted that the Amaila access road is projected to cost US$30M.
The initial contract to Makeswhar ‘Fip’ Motilall’s Synergy Holdings Inc. was for US$15.4M. Then President, Bharrat Jagdeo, had defended this funding, saying that Synergy was evaluated and found to be the best bid with the technical expertise required.
The additional amount for the access road would push the project cost to US$883.9M.
Government did not clarify how the increase in cost of the access road would affect the US$100M being plugged into the project by Guyana.
In its response to the Kaieteur News article, government noted that, “The Pakistan project benefits from concessional financing.”
It was also stated that, “the fact that the financing for such huge projects in Pakistan is difficult is evident, as the multilateral banks (MLBs) are willing to consider the financing for the project below a competitive margin of 4.75%… If same project would have to be financed based on local sponsors and no Certified Emission Reduction revenue, the MLBs would not have agreed on such terms given the risk profile of the country and local sponsors.”
There was no reference to the fact that the Chinese loan for the Guyana project comes with an interest rate of 8.5 per cent, with Sithe Global’s equity coming in for a return rate of 19 per cent.
Also not highlighted is that the Amaila project carries with it Debt Political Risk Insurance to the tune of US$55.7M, Interest during Construction of US$97.1M, and a Lenders Fee and Advisory Cost of US$34.9M.
In its haste to defend the rising cost, government failed to recognize the comparisons to a number of other projects.
This publication had compared the Amaila Falls Hydro Electric Project to several high-profile projects of its kind.
The Chinese Three Gorges power project with a capacity of 18,000 MW at US$1.3M per megawatt.
The Ilisu hydroelectric dam in Turkey which will cost US$1.6B and generate 1,200MW at an average cost of US$1.3M per megawatt.
In Sudan, the 1,200MW Merowe Dam cost only US$760M while the Gilgel Gibe II hydropower station in Ethiopia with a capacity of 420MW cost US$600M.
At the original cost of US$840M, Amaila Falls would effectively cost US$5.1M per megawatt. With government’s latest pronouncements that will jump to US$5.4M per megawatt.
|Name||Price||MW||Cost Per MegaWatt|
|Mono River, Togo||US$366.6M||147||US$2.49M|
|Chinese , Three Gorges||US$23B||18000||US$1.3M|
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