Amaila: Troubling dimensions of a troubled public project

guyana and the wider worldConclusion

Today’s column concludes the discussion of the Amaila Falls Hydro Project (AFHP). It examines a few troubling dimensions of the project, which have not been adequately addressed, even though passing references have been made to some.

Mis-specification

The first is an issue that I hinted at weeks ago, which is, the AFHP in its present version is mis-specified. It is being presented as a stand-alone project. However, at its inception in the late 1990s it was portrayed as the first of a three-stage hydropower development project (at a minimum) aimed at generating eventually between 1-3 thousand MW. The Upper and Middle Mazaruni area was the intended site for the later stages.

Specifying the AFHP as a multi-stage and not stand-alone development project has enormous consequences, three of which immediately spring to mind.

First, it would alter the financing scale and structure of the project. Second, it would have serious long-term operational implications for GPL. Third, the project area that should be covered in the environmental and social impact assessment (ESIA) would be substantially enlarged.

These observations are supported by the inferences, which could be drawn from GPL’s declared intention to maintain 50 MW of its present capacity, after the AFHP comes on stream. GPL’s plans presently project 88 per cent of its electricity supply will come from AFHP in 2017 and that by 2019 Amaila’s power will be insufficient to meet its requirements!  These circumstances have prompted GPL to go on record with the following concern: “There is no expansion plan contemplated for the Amaila Project, nor has it been technically planned for expansion or phasing purposes” (GPL, March 2013).

Consultancy evaluations of the AFHP have also queried whether or not the project is being designed as a multi-stage hydropower expansion programme. Goodland, 2010 (a government employed independent consultant) asks rhetorically if the AFHP is intended to be: “The first stage [with] two further stages for a final emerging output of 1,060 MW for all three phases together.”

The same consultant goes on to propose that, if the above holds true, then IDB’s intended environmental and social impact study should cover the final project area, and not only Amaila’s!

Impact on Indigenous peoples

A second and equally troubling dimension of this project is the persisting uncertainty of its likely impact on indigenous communities. Promotional literature on the AFHP declares that the indigenous population would not be affected by the project.

Nonetheless, there are studies (including ones prepared for the GoG and confined to the present Amaila project area only), which contradict this position.

Thus Goodland notes, “The Kuribrong/ Amaila area is traditional Amerindian land in the sense of traditional occupation and usufruct.” Further, he takes strong issue with the Ministry of Amerindian Affairs’ claim that “no Amerindian communities would need to be relocated for the access road, dam or reservoir” on points of detail (by referencing the Kaburi consultation) as well as the absence of explicit statements as to whether the claims refer to the traditional lands of the “Amerindian communities,” as against the narrow village “centres.” This report also queries whether such statements refer to Amaila only (Phase 1) or include later related stages of hydropower development.

Project execution/implementation

A third troubling feature is the project’s implementation profile. Certainly plans to construct a hydropower facility at Amaila Falls have been engaging investors for about three decades now. Since then we have had the following timeline: 1) Sithe Global becoming involved circa 2007; 2) the cost of constructing the project steadily rising; 3) prolonged delays in constructing the access roads; 4) similar prolonged delays in reaching financial closure; 5) no publicly available up-to-date report on the economic feasibility of the project; 6) a similar circumstance obtains for the full GPL Power Purchase Agreement (PPA) (with dollar values); and 7) the price GPL will pay for Amaila electricity keeps varying substantially in media reports.

Expanding on the above: 1) the implementation delays have become legendary.  The most spectacular example is the case of Synergy, a company with no expertise in rainforest road construction being awarded the Access Road construction contract (at a cost of US$15.4 million). The Goodland report cited above has described Synergy as a company never having filed a return at the time it was awarded the contract, and consequently its books are not audited, so that, its shareholders, finances, and statutory compliance remain uncertified.

2) The projected electricity tariff has risen substantially over time. The initial MoU and hydropower licence for Amaila hydropower had projected a selling price of 7.5 US cents per kilowatt hour.

Two years later the GoG declared a considerably higher price (46 per cent) of 10.8 US cents per kilowatt hour and clearly indicating that this figure included “all costs.” Recently, GPL has indicated a yet higher price of 11.75 US cents per kilowatt hour. Independent analysts even predict an eventual price higher than that which presently prevails!

Because of this, next to the publication of an up-to-date economic feasibility study, the power purchase price agreed to in the PPA is probably the most desired bit of information required for getting a firm handle on the likely success or not of the project.

The great concern is that experiences in poor countries suggest that power purchase prices in PPAs are often scandalous.  Expert reviews emphasize the requirement for close public scrutiny of these, as in several instances “uninformed political directorates” de facto agree to the terms of PPA’s and thereafter hand them over to the executives of power utilities to implement!

Conclusion

The final troubling dimension is that media reports claim the opposition parties in the National Assembly plan to “piggy back” on the IDB’s financial  commitment to the project in determining whether to give their support to it, or not.

One can hardly imagine a more troubling state of affairs then this willingness to surrender their leadership responsibilities to an external agency, when faced with a ‘troubled’ project of this immense size.

Until more information becomes available, this concludes the columns on the ‘Anatomy of the AFHP.’