Jan 17, 2021 News
By Kiana Wilburg
Kaieteur News – In light of the government’s intention to land a multibillion dollar pipeline at Wales, West Bank Demerara to bring gas from the Liza Phase One field in the Stabroek Block, international lawyer, Melinda Janki has called on President Irfaan Ali to provide the nation with evidence that the venture is economically sound.According to Janki in her January 13, 2021 letter to the Head of State, it is critical that this justification be provided to the citizenry in the interests of transparency, accountability and good governance. Towards this end, she has asked Ali to provide a series of plans which span the economic spectrum of this major project that could cost almost US$400M.In the letter seen by this newspaper, Janki has asked the President to present a Natural Gas Business Plan which provides a comprehensive, quantitative and qualitative presentation of the Guyana natural gas project. The lawyer articulated that this presentation should include, but not be limited to: a brief description of the major facilities to be constructed (drilling and extraction, offshore and onshore pipelines and natural gas power stations) including capacity, size, estimated start and completion of construction and anticipated lifecycle; comprehensive, estimated construction costs of each facility and an aggregate cost assessment and construction cash flow from ground breaking to commercial operation; and a comprehensive 30-year business plan of each individual facility and, if integrated, the plan should specify the operational assumptions.
Further to this, Janki said that the business plan should cover estimated revenues and expenses and financing costs; detailed financing assumptions of each facility and specific provisions of the business plan concerning Guyana’s annual revenues derived from the natural gas project.
The second piece of evidence, which she challenged the President to provide is an Energy Plan which outlines Guyana’s electric utility’s resource needs to meet expected demand over the next 30 years and the assumed additions and retirements, cost and performance assumptions used in the plan. In this regard, she said that a basic rationale should be provided as to why the proposed natural gas project is part of an optimal resource mix for Guyana and what will be the component parts of that resource mix. Additionally, Janki said the analysis should contain a scenario analysis that includes a range of other resource mixes including scenarios that maximize wind and solar energy capacity in Guyana.
The international lawyer also requested the provision of an Economic Competitiveness and Rate Plan. This she said should be outline of an economic competitiveness analysis that compares the various energy scenarios to economic outcomes related to price and rate of electricity for various consumer groups in Guyana.
She said too that it should answer a range of questions such as what will be the major changes in the operating systems of the electricity grid upon the commercial operation of the natural gas plants; what will be the all-in rates of electricity and expected inflation factors overtime; and what would be the cost of electricity for people in the hinterland under the different scenarios.
The final piece of evidence she asked to see was a Fiscal Plan. According to the lawyer, this should show an assessment of how the budgetary and financial plan impacts of the new natural gas plan along with the necessary budgetary and debt outlays that are needed to secure the planned benefits of the new natural gas system. She also asked for it to show what impact that would have on Guyana’s annual budget.
In the absence of the foregoing, Janki registered her fears that the project which hopes to be a solution to the nation’s high electricity costs and power outages, would leave it in a risky position where it takes on substantial liabilities in order to secure benefits that are, at best, speculative.
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