Amaila Falls Hydro project figures don’t add up

Nov 26, 2021 News

…onus now on Govt. to come clean- Energy Institute

Kaieteur News – Electricity generation in Guyana is largely fueled by Heavy Fuel Oil (HFO) and Diesel powered plants, run by the State owned, Guyana Power and Light Inc., (GPL), at a cost of about US$0.36 per kWh but the figures being proffered as cheaper alternatives, do not add up.

Think Engine Institute & Energy Services’ Alfred Bhulai

In fact, the administration in its presentations trumpeting the Amaila Falls Hydro Electric Project (AFHEP) previously estimated in excess of US$1B—has in fact, convoluted the affair with regard, whether the cost of electricity for the consuming public will be reduced or increased.
Vice President, Dr. Bharrat Jagdeo, has been at the forefront in recent years, reiterating ad naseaum, the electricity rates for consumers in Guyana being slashed by half with GPL still earning a decent profit.
The assertions were recently adumbrated by Think Engine Institute & Energy Services’ (TEIES) Alfred Bhulai, who in a recent public missive said, based on the information being peddled by administration spokespersons, the repayment costs for the projects would not allow for the electricity cost to be reduced but in fact will increases.
According to TEIES’ Bhulai, the administration’s defence of the Hydro Electric Project is rooted in a 2016 Norconsult study which states, “The only realistic path for Guyana toward an emission free electricity sector is by developing its hydropower potential. The fastest way forward is to maintain AFHP as the first major step for substituting its current oil-fired generation.”
He said while this was debatable in 2016, it is no longer the case since solar power has overtaken it in terms of cost effectiveness.
With regard, the AFHEP, Bhulai contends that with a price tag of US$900M (we are hearing about US$1B now) for 165 Mega Watts, this works out “at 38 US cents per kWh unit of electricity.”
Since then, it has been revealed to the public—without any documentary study detail—that China Railway Group Limited will build, own, operate and transfer (BOOT) the AFHP at no cost to Guyana except for 7.737 US cents per kWh that GPL will pay for 20 years.
As such, according to Bhulai, this would mean that “if we get the full 165 MW power from AFHP over the 20 years, we should receive 29 TWh (Terawatthours) of electrical energy, for which GPL will have to pay US$2.24B. in order to access this energy.”
Additionally, he reminded, as was confirmed by several government reports that, “GPL will obviously have to set up a transmission and distribution (T&D) system.”
The TEIES’ spokesman said too, based on the generation to T&D ratio of costs for a US$2.2M contract for the design, supply and installation of a 150 kW hydropower plant on the Cheong River, at Kato Village, in Region Eight, signed by the APNU/AFC government in September 2019, the T&D would cost GPL an additional US$3.8B (not the few hundred million US dollars which they seem to be considering) amounting to US$6B for 165 MW of power.
This, he said, works out to US$0.21 cents per kWh, more expensive than the US$0.15 cents, which the Government is telling us we will have to pay, but far less than the US$0.38 cents, which I worked out before this new revelation was booted up.”
This, he said is a huge difference, “but it is not my job to account for it by guessing how the Government is playing with our future.”
As such, Bhulai was adamant the onus is on the Government to provide the information requested by citizens, who without knowing the financing conditions (and other concessions?), have to make assumptions about interest rate and payback period.”
He said, let the Government publicly reveal the conditions of financing.
Qualifying his position, Bhulai said, “…we have good cause to ask our respective governments” and pointed to allegations of rigged elections, a foisted backlog of 10 years of audit, Omai Gold Mines Ltd. never declaring, a lack of proper auditing of gold and oil production, in addition to oil companies getting away today with unaudited project costs and their-at-first-secret production sharing agreement, “which our governments and oil companies say is not supposed to be renegotiated.”
Further qualifying his position, he pointed to the bungled US$200M Skeldon Sugar Modernisation Project (SSMP). Emphasising the implications of the lack of proper audits and the administrations’ successive track records, the Energy Institute spokesperson adumbrated “This is why the calculations behind the revelation of the US$0.07737 price of AFHP electrical energy per kWh must be shown.”

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