Government still guessing on Amaila project costs

- says former CDB project

Former project manager for the Caribbean Development Bank (CDB) Charles Sohan says that the government needs to be more transparent with the Amaila Falls Hydroelectric project (AFHEP) and should explain how the project’s estimated price could increase by more than US$200M before it has even been finalized.

“Something doesn’t sound right,” Sohan said adding that “they [the government] are still guessing” on a project that hasn’t been finalized. The AFHEP is expected to be a 165 MW facility at the Amaila and Kuribrong rivers.

On Tuesday, President Bharrat Jagdeo announced that the hydropower project would cost approximately US$835M up from the US$616M projected last May. “This is going to be a big project, US$850M, not just the project itself but its entire construction costs and the cost of capital in the construction period… a little less maybe US$835M,” Jagdeo said during the commissioning of GPL’s 15.6 MW expansion to its power plant.

Head of the Presidential Secretariat Dr Roger Luncheon subsequently explained that the escalation in price was connected with financing and materials for the project. “The escalation of the associated and related costs for arranging the financing; paying interest and insurance and such like, those are responsible for driving up the cost to where it is today,” he said. He noted that the contract was agreed since 2008/2009 and since then the cost of various materials such as cement and metals would have increased.

Sohan, during a telephone interview, said that while the AFHEP is a “good and wonderful” initiative it needed to be executed in a transparent manner. He said too that Guyana should not be made to guarantee any loans on the part of the investors. Sithe Global, the developer of the project, has said that it will guarantee the loans for the project. Sohan said that given the proposed location of the falls, any investor will look for certain guarantees and only the government would be in a position to offer such guarantees.  He said that it is important that the Guyanese taxpayers are not saddled with a financial burden years after the hydroplant is completed.

The figure identified by Jagdeo is a “ballpark figure” and “he can be way off anything between 20 and 50 per cent, Sohan explained.   While serving as the Project Officer for the CDB, Sohan also oversaw various projects funded by the World Bank and according to him while these lending agencies may approve funding for a project it would take months for the funding to be released.

Meanwhile, Sohan was very pessimistic about Fip Motilall being able to complete the US$15.4M Amaila Falls Access road by his new deadline of December. “He is not going to finish the road in December because the rainy season is going to start hitting him in November,” Sohan said.  “If at this point in time, he is 40 per cent completed and it is highly unlikely that he is going to reach 80 per cent in November,” he added.

Questioned about the modification work that Motilall now has to undertake, Sohan said all this could have been avoided if the road had been properly designed in the first place by an entity with the relevant experience.  He expressed the view that with so many players involved in the project it appears as if “the left hand does not know what the right hand is doing.”

Motilall, Sohan said, will now have to go back and widen the travel-way of the road from (5 metres to 7 metres) as well as increase the thickness of the road. He said that the road is in fact being widened by 40 per cent and with the additional materials being required for thickness the price of the road could increase by about 50 to 60 per cent. manager

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