Jun 03, 2017 News
Sithe Global, the US-owned company that was developing a 160-megawatts hydro-electric project for Guyana at Amaila Falls, Region Eight, seems to have abandoned hopes of the initiative.
The developer, which announced a pullout in 2013, has sold its stakes, says Minister of State, Joseph Harmon.
The official was yesterday being questioned about the project, during his post-Cabinet press briefing at the Ministry of the Presidency.
Insisting that Government has not abandoned hopes for the Amaila Falls site for the development of an electricity project, the Minister said that Sithe Global has sold off its interests.
“My understanding from Minister (David) Patterson (Minister of Public Infrastructure) only recently (is that) Sithe Global…the company that held the intellectual property rights…(it has) …sold those rights to somebody else so that what ….is taking place outside of Guyana—that is not under our control.”
He explained that the Ministry of Public Infrastructure has presented a Public Infrastructure Plan going forward for Guyana and that plan envisages the development in roads, bridges and electricity. In the generation of electricity, various means are considered, either by wind, solar and hydro.
“All of these are sources of energy, we do not rule out any of them. That is to say, that in the hydro electricity sector, Amaila Falls is still one that is being considered. But what I want to say is that all of these issues – all of the various 80-something waterfalls that are here in Guyana – we are exploring them and we will make the best use of these resources at the appropriate time and in the best interest of the Guyanese people.”
The project was a major one for the previous administration, under the People’s Progressive Party/Civic. In fact it would have been the biggest project for the country.
Guyana has already spent US$40M-plus to build a number of access roads leading to the Region Eight site.
However, the project ran into serious trouble when in 2013, the Opposition Coalition, which is now in Government, expressed grave concerns over the almost US$1B costs and other factors.
A key environmental Bill was voted down and days later, Sithe Global, announced its pullout.
A critical independent report on the future of the Amaila Falls Hydropower Project, released last December, had warned that Guyana cannot move ahead with it in the current format with the financial model in need of restructuring.
The Final Report of Norconsult, titled ‘Review of the Amaila Falls Hydropower Project in Guyana’ also said that another “well merited” investor and contractor should be found and that the main sponsor, US-owned Sithe Global and the Engineering, Procurement and Construction (EPC) contractor, China Railway First Group (CRFG) should not be associated in any way.
Norconsult was hired by the Norwegian government last year to decide whether the project was feasible.
The project has been a major issue between the PPP/C administration – which pushed for it, saying it would help solve Guyana’s dependency on fossil fuel – and the then Opposition, which held out, insisting that the costs (estimated to go over US$1B), were too high and would burden Guyanese for decades to come with long-term benefits being few.
According to the report, the current BOOT (Build, Own, Operate and Transfer) type public/private/partnership model should be maintained for the project implementation.
However, Norconsult, which had teams in Guyana, had also made it clear that the only realistic path for Guyana towards an emission-free electricity sector is by developing its hydro-power potential.
The administration had said that it was considering several waterfalls across Guyana to develop.
Norconsult had acknowledged in its report that the Amaila Falls project would not be enough and that as the power demand is growing, and for reaching the goal of 100% emission-free generation by 2025, a second hydro-power plant of capacity comparable with AFHP will have to be commissioned by then.
The report tagged Amaila as the best hydro option, as there are immediate current reports relating the environmental and social impacts.
“No resettlement is required and there is limited human activity in the area directly affected by the project. About 23 square kilometers of rainforest is inundated by the power plant’s reservoir. The live storage volume is small compared to the annual water flow and the plant will be operated mainly as a run-of-river plant with little impact on the downstream river hydrology, except for the approximate four-kilometer stretch of the river between the intake dam and the tailrace outlet from the powerhouse.”
To get on with project or similar ones, the consultant said the Government of Guyana (GOG) will need continued support by the Inter-American Development Bank (IDB), or a similar institution, and Guyana Power and Light will need technical and management support by a highly qualified engineering company with extensive experience from the international hydropower industry.
The report suggested that the cost for buying out Sithe Global from the project company and expenses for services by an engineering company engaged for support until a new main sponsor is established, are covered from a portion of the US$80 million deposit in IDB, for later being turned into equity contribution from GOG to the project company.
Norway since 2009 had supported the project, depositing US$80M in IDB earmarked for Guyana’s equity share in AFHI, a Special Purpose Company for realising the project.
Guyana would have borrowed the rest from Sithe Global and the Chinese, among others.
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