IDB proposed support to Amaila Falls hydropower project pegged at US$200M

Guyana appears closer to securing key financial support for the construction of the Amaila Hydropower plant from the Inter-America Development Bank (IDB), which has proposed support of up to US$200 million.

The agreement, according to the bank’s website, is currently at the “preparation” stage. “It is expected that the IDB will provide a political risk guarantee (PRG) to the Sponsor and/or Sr loan to the Project Company (“A-Loan”), the project abstract, dated June 7, 2011 said. The bank said that its total combined exposure between the PRG and the A-Loan will not exceed US$200 million.

The total cost of the Amaila Falls Hydroelectric plant is projected to be approximately US$700 million and it is being developed by Amaila Falls Hydro Inc, the project company, which is a Guyanese wholly owned affiliate of Sithe Global Power, the project sponsor, the abstract said.

The bank said that pursuant to its Environment and Safeguards Compliance Policy, the project has been classified as a Category A operation. Last year July, the IDB 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 will be used by the bank to evaluate the feasibility of the project.

The IDB said that the project is consistent with its 2008-2012 country strategy for Guyana which includes support for the government’s efforts in finding alternatives to oil-generated energy.  The bank said too that this support complements support it has already provided to the government in the energy sector. The AFHEP was described by the IDB as a centrepiece of the government’s Low Carbon Development Strategy (LCDS). “It is a key project for Guyana as it has the potential for a unique transformational effect on the country by converting its base load fossil fuel electric generation capacity to clean hydro-generation,” the IDB said. “The medium and long-term economic benefits are also expected to be substantial for the country as the project will not only serve as a natural hedge against oil price volatility and foreign currency exposure, but also provide a long-term, low-price and reliable source of renewable energy,” the bank added.

Both the Government of Guyana and Sithe Global have identified the IDB and the China Development Bank (CDB) as being key financial partners in this project.  Senior Vice President of Sithe Global Rafael Herz, in March had projected a total cost of US$650 million to US$700 million and said that his company is set to contribute at least 30 per cent (US$150 million – US$200 million) in equity in the AFHEP. Herz had said that the company and the government have been in discussions about contributing equity in the project. Government has already contributed US$15.4 million to build the access road, which President Bharrat Jagdeo said is Guyana’s equity in the AFHEP. However, the road, which is being constructed by Synergy Holdings, is still way behind schedule. The completion of this road is seen as key to securing financial closure for the project before the end of the third quarter. Work on the AFHEP is expected to start before the end of the year.

China Railway First Group Co has won the contract to construct the hydropower plant.

The AFHEP is a 165MW facility that will be constructed immediately upstream from the confluence of the Amaila and Kuribrong rivers. The Guyana Power and Light (GTPL) is supposed to purchase the project’s entire output of approximately 143 MW of delivered capacity under a 20-year Power Purchase Agreement.

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