Many troubling questions remain over the Amaila project

Dear Editor,
Your Sunday Stabroek article of September 25 (‘Modification costs might help reduce overall cost of Amaila project’), continues to highlight many troubling questions regarding the design, specification, payments and funding for the proposed Amaila Falls Hydropower Project (AFHEP) with claims without substantiation that design enhancement will reduce overall project costs.  However, taxpayers should be aware at this stage of project development of the serious pitfalls which lie ahead with respect to project financing and execution, since work has recently commenced on an access road as part of the Government of Guyana (GoG) equity contribution to the project.  Time and cost overruns due to poor design, lax specifications and ineffective construction management are adversely affecting construction progress on the access road segment for this project, resulting in just about 40% of work completed at the end of its contract period which ended in early September.  The cost for this road is likely to be less than 3% of total project cost.

It appears that GoG has not established a management control system for AFHEP with the responsibility to set design criteria, cost and time limits for project completion. This omission has continued since the National Industrial & Commercial Investment Ltd (NICIL) produced  the original road specifications, while the Ministry of Public works in collaboration with Sithe Global (the Developer) prepared the original road design which was reviewed by China Railway (the power plant contractor) which several months later during construction found the road design inadequate, resulting in design and specification changes which were initiated and finalized by the GoG Engineering Advisor.  In this loosely managed project it is not clear what are the duties and responsibilities of the engineering firm on site seemingly supervising construction for the access road project, while critical decisions for project execution are being made outside of its function.

To date, financing of the AFHEP has not been finalized, as cost for the project inclusive of the power transmission system from the power plant to the coastland is still to be determined and assured, but this has not prevented the CEO of GPL from dreaming that AFHEP will be operational by the year 2015.  It seems, however, that China Railway has been designated the contractor for the hydropower plant without going through a competitive bidding process, and hopefully the access road will be completed at year end 2011, all without committed total project debt financing thus far.

In 2005 at the opening of Guy Expo, President Jagdeo stated that within five years hydropower will flow from Amaila Falls (one of the five sites GoG had under consideration).  Six years later in 2011, negotiations are still in progress to finalize a hydropower project, and there are hopes that despite the gloom of the gripers and nitpickers who go after every big GoG project, he will ink a deal before he leaves office in a few months time and not allow the forest to reclaim the access road under construction.

It is worth noting, that GoG made upfront payments as its equity contribution for preliminary works for a proposed Marriot Hotel in Kingston, Georgetown, which to date has gone nowhere, and this should be a stark reminder to all of us as to where GoG is heading with respect to AFHEP.

Yours faithfully,
Charles Sohan

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