Government has delayed finalizing the funding for the Amaila Falls Hydroelectric Project (AFHEP) so as to minimize the interest on loans, President Bharrat Jagdeo says.
“We are looking at the second half of next year,” he told a news conference on Wednesday, when asked how soon the government would finalize financing for the project. Previously, Jagdeo said that the government would be looking to finalize financing for the project by the end of this year. To date, the China Development Bank, Sithe Global and the Government of Guyana are the likely partners in the project, he said.
While the Inter-American Development Bank (IDB) had been mentioned previously as a potential partner for the project, it is still not clear whether they will help to fund the construction of the hydropower plant. In July, the bank entered into a technical co-operation agreement with the Guyana government amounting to US$1.2 million to partially fund studies for the AFHEP, which the Bank said will be used to evaluate the feasibility of the project. It was said that a substantial portion of the environmental studies for the project will be ready at year-end and that it would be used to determine if the IDB continues the due diligence phase in the lead-up to possible financing. The studies include: the Environmental and Social Impact Assessment, the Hydrology Review and the Off-taker and Market Assessment. There will also be the establishment of a panel of experts.
Contacted recently, IDB Country Representative Marco Nicola said that he was not aware of any of the results of the assessments carried out.
Meanwhile, explaining the delay in finalizing financing, Jagdeo said this was necessary to postpone closing a deal until the road to the site is near completion so as to minimize interest on the project. “If you close too early and you don’t have the road built…you will have to start paying interest on the money you close on. So if you close on US$500M or US$600M and you can’t start the construction, then you have to pay interest on that. So it’s best when you close to completion of the road,” Jagdeo said.
Work on the access road commenced in October, when Synergy Holdings Inc. was granted the Construction notice to proceed by the Ministry of Public Works. The project was supposed to have started in July but several factors delayed the commencement, including the late arrival of equipment and the failure of environmental assessments to be completed on time. The construction of the road is expected to be completed within eight months.
Asked on Wednesday if attention had been paid to whether Guyana will have enough rainfall to power a hydropower plant given the impact of climate change, Jagdeo said that these risks had been assessed through hydrological tests. He pointed to the need for “an adequate reserve” in the cases where there may not be adequate rainfall but noted that this was seen as “a remote experience.” He said that the reserve would be able to give off 120MW or 130MW in power.