While lauding the country for another year of robust growth, the International Monetary Fund (IMF) has added its voice to concerns about ensuring that the Amaila Falls Hydropower Project (AFHP) is economically viable.
In a statement yesterday on the conclusion of its Article IV consultation with Guyana on November 9, the IMF offered its assessment of the economy, saying among other things that it looked forward to measures for the boosting of the efficiency of public enterprises and to ensure that the AFHP is feasible.
The statement said that the IMF Directors recommended “careful consideration of the risks and contingent liabilities arising from that project, and welcomed the authorities’ efforts to pursue international best practices in its management.”
Such concerns have been expressed locally and are also said to be an issue for the Inter-American Development Bank (IDB), which is expected to be a key player in the long-delayed ambitious project to transform the country’s energy generation from hydrocarbons to hydropower.
In October this year, the IDB told Stabroek News that the due diligence process which has started for the Amaila Falls Hydroelectric project will finally determine whether or not the bank finances the project and also the level of the financing.
A mandate letter was signed in Xi’an China on September 11, 2012 along with the Engineering, Procurement and Construction contract and investment agreement, which marked the commencement of the due diligence. The US$840 million project is scheduled for commencement of construction in 2013 for delivery in 2016. The Government of Guyana said that financial closure for the project is expected by second quarter 2013.
“The mandate letter was signed between IDB and Sithe, where Sithe provides a mandate to the bank to analyse the technical, environmental, social and financial aspects of the project, as input to a possible loan,” IDB Representative here Sophie Makonnen said.
“During the course of the bank’s due diligence, IDB sector specialists will review and appraise the project from a variety of perspectives – institutional, financial, environmental, and social – including the disclosure of an Environmental and Social Management Report in the event that the project is brought to the IDB’s Board of Executive Directors for consideration and approval,” she said, adding that the project’s overall impact on the economy will also be a consideration.
She noted that the due diligence process will include the requirement that a programme be agreed upon by GPL to continue reducing electricity losses. “We expect that part of the investment in infrastructure required to make Amaila Falls feasible will contribute to loss reductions. This will maximise the benefits of the project to Guyana and its people,” Makonnen said.
AFHP will be the single largest investment in the country’s history and there are differing views as to whether the debt burden will be too severe, whether there will be a significant reduction in the cost of power to consumers and whether the aged network of GPL and the infrastructural challenges of the country will be able to efficiently absorb the power. Environmental concerns have also been raised.