– says Govt. willing to hold referendum vote
Government has vowed to pull out all stops to make hydro power a reality. Prime Minister Sam Hinds said, yesterday, that it is even willing to hold a referendum on the issue.
During a visit at the John Fernandes wharf yesterday to oversee the arrival of three Wartsila engines, Prime Minister Sam Hinds also insisted that his Government was not accepting that the project “is not an immediate reality.”
He told reporters that he is even willing to “dance a jig” and “sing a song” to get support for the project.
Last month, the US developer, Sithe Global, pulled out after the main opposition party voted against two key legislations which Government said were critical for the financing of the project. Opposition cited concerns over the cost which was estimated at over US$850M.
The Opposition had also questioned the rate of returns to Sithe Global and the other financiers —Inter-American Development Bank (IDB) and China Development Bank (CDB).
It will be biggest infrastructure projects in Guyana and one of the largest for the region. Sithe Global said that one of the requirements for financing for the project was consensus by especially Opposition parties in Parliament.
Since then Government, while making it clear that the project was in trouble, said that it is still holding out hope that a new partner could be found or that even Sithe Global could be enticed to remain.
According to the Prime Minister, the question of Amaila is not a political one or one of the ruling party. Rather, it is one where the costs of energy for Guyana could be halved with the coming of hydro power.
Hinds said that he was caught “flat-footed” by the Opposition stance, since the People’s National Congress (PNC), in 1976, has been backing the Amaila Falls site, in Region Seven, as an ideal location for a hydro facility. In 1982, another study reinforced this.
The Prime Minister insisted that his party never “rejected” hydro power and that the records will show this. It is the hope that the Amaila project will be realized in four to five years, he said.
Regarding concerns from financial analysts and Opposition sources that interest rates for the IDB loan at nine per cent would have been too high, Hinds explained that Guyana was once one of a group of countries that fell under the Heavily Indebted Poor Countries (HIPC) arrangements in which debt relief and low interest loans were made available from financial institutions.
Guyana, he said, has come out of that arrangement and now has to pay the higher interest rates charged to middle income countries. The IDB interest charges, as such, is not unreasonable.
He also defended the decision to allow Sithe Global a return on investments of 19 per cent. Sithe Global would have been managing the project for the 20 years before handing it to Government at no cost. This rate was comparable to other commercial investments.
According to Hinds, another company that had been interesting in developing the Amaila hydro in the early 2000s, had been negotiating with Government, and was demanding 25 per cent in returns. The negotiations fell through after it was recognized that Guyana could not afford to take the deal with oil prices at just US$30 per barrel. It would have been cheaper to use Wartsila engines then, than hydro.
It is the belief of the ruling party that the current Amaila Falls hydro power deal is “as good” as any other.
He also made it clear that current cost for electricity using fuel-fed engines and based on current oil prices stands around 23 US cents per kilowatt hour. Hydro would work out to around 12 cents and after 10 years would reduce to about nine cents.
The hydro project has sharply divided the Government and the Opposition in the National Assembly, with Government threatening not to assent any legislations tabled by the Opposition.
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