Construction of the access road and the transmission line to the proposed site for the Amaila Falls Hydroelectric Project (AFHEP) has been timetabled to start next month, although it is unclear whether Synergy Holdings is in a position to begin the project as scheduled.
According to the revised Low Carbon Development Strategy (LCDS) the “principal construction of the access road and transmission line right-of-way is planned to start in July 2010,” and the time frame for this construction is eight months. The revised strategy was launched last month by President Bharrat Jagdeo at the Umana Yana.
Synergy Holdings was controversially awarded the contract for the US$15.4 million project for the construction of the access road and the transmission lines. Following the award of this contract in April, both Head of the National Industrial and Commercial Investments Ltd (NICIL) Winston Brassington and President of Synergy Holdings Inc Fip Motilall told Stabroek News that several pieces of equipment were being brought into the country.
However, last month Cabinet Secretary Dr Roger Luncheon, during a press conference, said that “in billiard terms”, Motilall was “behind the eight ball”. Luncheon suggested that much attention was being paid to when Motilall got his equipment into the country, which would have a bearing on his ability to deliver by the due date. Efforts to contact Brassington for a comment on the likelihood of construction commencing as scheduled were futile. Motilall has declined to speak to the media on the AFHEP in recent months.
According to the LCDS document, “the project will be supported by a US$16 million access road and partial transmission right-of-way clearing, to be paid for as part of the Government of Guyana’s contribution to the project. “ It said too that “construction of the road will precede the main hydro project and transmission line project in order to reduce the larger project construction time and improve the economics of the deal structure, ultimately benefiting the country in reduced electricity tariffs.” Further it stated that “construction of the road and right-of-way will comply with country and international social and environmental safeguards.”
According to the Request for Proposals (RFP) for the project, “a more detailed ESMP [Environmental Social Management Plan] must be developed by the contractor after initial notice to proceed” and that it should be submitted to the owner/project manager for approval.
Significantly, the price of the 154 MW project has been pegged at approximately US$650 million in the LCDS document. The government recently released a statement where the total price (interest included) was US$616 million. This had come after Rafael Herz, Sithe Global’s Project Manager for the AFHEP said that the price for the project would be US$650 million. This figure, according to Herz, included an estimated US$190 million for the transmission line and other supporting infrastructure. The government, however, said the actual construction cost of the plant is US$450 million (US$306 million for the actual hydro construction and US$145 million for the transmission line, clearing of its corridor and for the road). Interest during construction, the debt reserve fund and construction contingency would account for US$165 million, the government said, which would lead to a total price tag of US$616 million.
Meanwhile the LCDS document noted that “the project is structured as a 20-year-old Build-Own-Operate-Transfer (BOOT) arrangement under which Guyana Power and Light (GPL) will purchase 100% of the capacity of the project under a “take or pay” Power Purchase Agreement (PPA) with the private sector sponsor, Sithe Global, LLP. Sithe Global has formed a special purpose company (Amaila Falls Hydro Inc) to execute the project and to contract with GPL [Guyana Power and Light Inc] and the Government of Guyana. After 20 years, the project will be transferred to the Government of Guyana at no additional charge.
“The project footprint on the rainforest will be less than .001% of the State Forest area, and Guyana’s Environ-mental Protection Agency, working in partnership with the Inter-American Develop-ment Bank (IDB), will ensure that its development meets both national and international social and environmental safeguard benchmarks,” the report said. It also said that “the project will work closely with local and international non-governmental organisations such as Conservational International to ensure exacting environment, social and safety standards. Emphasis and care will be taken to ensure that neighbouring communities will benefit from the project’s construction,” it added.
The government has earmarked US$40 million-US$60 million in LCDS funds that will be used to take-out Sithe’s equity and by extension reduce the annual “take or payment to the Amaila Falls Hydro Inc. “Under the terms of the project, the government has the right but not the obligation to substitute Sithe’s high-cost equity with LCDS funds,” it said. “Once the plant is operational, future governments may exercise the option to sell the government’s equity stake to private investors,” it further said.
Completion of the hydro project and transmission line is expected to take 40 months with the commercial operation date tentatively scheduled for the first quarter of the 2014, the LCDS document stated.
