Amaila Falls developer involved in hydropower project in Uganda

The developer for the Amaila Falls hydro plant, Sithe Global Power LLC, is involved in a controversial hydropower project in Uganda, said to be one of the most expensive in the world.

According to its website it was also part of a consortium which built a hydroelectric facility in the Philippines, and it has “construction, management or operations” experience in hydroelectric plants in the US as well. It does not enumerate these.

For the rest, its website lists its power projects in various parts of the world as being gas-fired, diesel, thermal, combined-cycle, coal, etc.

Stabroek News was unable to communicate with anyone at Sithe, despite diligent efforts over a two week time-frame.

Sithe Global Power LLC, is part of a consortium of sponsors currently building a hydropower plant in Uganda which is proving to be one of the most expensive in the world, with a price tag so far of US$860 million.

Significantly, after completion, the 250 megawatt power station is not expected to lower electricity tariffs for Ugandans, despite initial promises from the project sponsors that it would, the Ugandan energy ministry said last year in the government-owned New Vision newspaper.   The paper also quoted the country’s energy minister as saying that the initiative was a “bad project.”

Sithe Global Power LLC, an affiliate of the Blackstone Group, and Industrial Promotional Services (IPS), a division of the Aga Khan Fund for Economic Development (AKFED), joined together to form Bujagali Energy Limited (BEL). The consortium took over as project sponsors for the construction of the power station on the Nile River at the location of the Bujagali Falls, after the one of the original developers of the project, US-based AES Energy pulled out of the deal in 2003.   AES, which had partnered the Ugandan-based Madhvani Group, withdrew following strong objections from environmentalists inside and outside Uganda.  Construction on the project commenced in mid-2007.

“The project cost went up from the original budget of US$500 million to US$860 million, with indications that it may hit the $1 billion mark as a result of high interest rates and other factors,” the New Vision newspaper said in an article dated September 25, 2009. The World Bank Group, through its agencies, is the lead project lender. Other funders include the African Development Bank, the European Investment Bank, commercial banks and donors.

The article also said that “the interest rate for the Bujagali power project loans is determined by the London Inter-bank Offered Rate.” Further the article stated that while “experts say that the cost of hydropower construction per megawatt usually ranges between $1 million and $1.5 million, at the price of $860 million, Bujagali’s construction cost will be $3.4 million per megawatt.  The hydropower plant is being constructed on a Build Own Operate Transfer (BOOT) scheme, where the developers will run the plant for 30 years before it reverts to the government, the newspaper said.

The document released by the ministry, reportedly refers to a Work Bank review of the power sector, which advised that tariffs be increased by 5 per cent last year, and by a similar percentage this year to avoid shocking Ugandans with a sharp hike in the price when the Bujagali dam is completed. “The first two small adjustments will avoid larger increases that will otherwise be necessary when Bujagali comes on the line. The Government should also consider linking movements in the international oil price to electricity tariffs,” the World Bank review reportedly said.

The study contradicts the assertion by BEL that power tariffs would drop from 24 cents to an average of 6 cents per unit once the station became operational, the article noted.

According to the article, “some of the most expensive power plants built or under construction include the Chinese Three Gorges power project with a capacity of 18,000 MV at $1.3 m per megawatt. Further it said that “the controversial Ilisu hydroelectric dam being built in Turkey will cost$1.6 billion” but noted that it will generate 1,200 MV of electricity, at an average cost per megawatt of $1.3 million.

The article also pointed to the $760 million 1,200 MW Merowe dam constructed on the Blue Nile in Sudan which was commissioned in March of last year and the $600 million Gilgel gibe II hydropower station in Ethiopia with a 420 MW capacity.

It quoted Uganda’s energy minister Hilary Onek as saying that “there were mistakes in the Bujugali project.”

“It is a bad project, over-delayed, and over priced. If I had been there (as Minister of Energy), I would not have allowed poor negotiations for this project,” he reportedly said.

Meanwhile, another report published in the New Daily, noted that the commission date for the project had been delayed since the contractor had “encountered unfavourable ground conditions.” The project, which commenced in mid-2007, had a 44-month timeline and was originally slated to be completed by October 2011.

The article dated January 31, 2010 quoted the project director for the BEL, Glenn Gaydar, as saying that the works necessitated significant redesign, and construction of a new major structure related to the gated spillway in order to safeguard the integrity and safety of the dam.

“The poor rock condition in the tailrace section of the gated spillway caused major changes to the works but we anticipate no changes in the project cost as the additional work will be covered under the normal project contingency,” Gaydar is quoted as saying.

The project director did not, however, set a new date for the commissioning of the plant, and said this would be communicated after the necessary analysis had been completed.

Calls unanswered
Sithe Global Power LLC has been identified as the developer for the Amaila Hydropower Electric Project and is currently playing a key role in negotiating funding for it.  Recently head of NICIL Winston Brassington noted that the company was an international development company engaged in electric generation facilities around the world. He emphasised that the company was a subsidiary of the Blackstone Group, which managed funds and investments worth billions of dollars.

The company’s website speaks of a 140 MW hydro project which would be a substitute for the expensive and mostly outdated generation facilities that were currently used. “It would not only represent a clean generation source, but also represent important foreign exchange savings for the country by reducing Guyana’s dependence on expensive imported fuels,” the website says. Further, the website stated that “the project design corresponds to a full technical feasibility study.”  It noted that “the project includes a 300 km transmission line to the substation near Georgetown (the capital), as well as a newly built and upgraded access road.”  It went on to say that “the project has a valid Environ-mental Impact Study and has obtained several of the required government approvals.  It said too that all of the energy generated will be taken by the “government-owned utility (Guyana Power and Light) through a long term Power Purchase Agreement , as well as an ‘Assignment of Receivables Agreement,’ which ensures the payment via pass-through payment from end use customers.”

On the website, Senior Vice President Rafael Herz has been identified as the Project Manager for the Amaila Falls project.  Repeated efforts by Stabroek News over the past two weeks to contact Herz by telephone and email have been unsuccessful, with the phone calls going to voice mail. Even calls to the company’s operators, have gone unanswered.

Other Sithe projects
The Sithe website supplied details of the successful completion of a hydroelectric project in the Philippines, namely, the “378 MW San Roque Multipurpose Hydroelectric facility.”

Sithe Philippines Holdings Inc, a subsidiary of the Sithe Global Power LLC, was one member of the consortium which constructed the $1.2 billion San Roque Multipurpose Hydroelectric Power Project (SRMP) in San Manuel, Pangasinan.   The consortium of contractors also included Marubeni Corporation and the Italian-Thai Development Public Company Limited. It was constructed under a Build-Operate-Transfer (BOT) scheme. The project was commissioned in May 2003, months ahead of the scheduled commissioning date which was set for some time in 2004. The project had been identified as a priority project under the National Power Corporation’s 1996-2005 Power Development Plan but was met with stiff opposition from locals who were concerned about the environmental and social impact of the project.

The company said on its website too that its construction, management or operations experience included:

US – 1,042 MW Independence gas fired project; 1,600 MW Mystic combined-cycle facility; 2,560 MW combined output of 23 additional thermal, gas turbine and hydroelectric plants

Philippines – 378 MW San Roque Multipurpose Hydroelectric facility

China – 100 MW Tangshan pulverized coal project; 66 MW Houjie diesel facility; 38 MW Changzhou simple-cycle plant; 600 MW Wenzhou coal fired facility

Korea – Ichon 227 MW thermal and combined-cycle facility; Daesan 97 MW thermal facility

Pakistan – 126 MW Tapal diesel facility

Mexico – 460 MW TEG-I and TEG-II pet coke facilities

Thailand – 120 MW Samutprakarn combined-cycle facility; 500 MW COCOIII CFB project

Canada – 875 MW Goreway combined-cycle project; 157 MW Cardinal combined-cycle facility

Australia 162 MW Smithfield combined-cycle facility

Apart from the Bujagali Hydroelectric Project, the website also listed the Mariveles Station as  currently under construction. The latter project will see the establishment of a coal station on the Bataan Peninsula, on the island of Luzon in the Philippines

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