Amaila hydro-project construction agreement signed in China

The agreement for the construction of the Amaila Falls Hydro project and Transmission Line was signed yesterday in Xian, China by Sithe Global and China Railway First Group (CRFG) and Finance Minister Dr Ashni Singh urged all partners to recommit their efforts to seeing the timely realisation of financial closure and implementation.

The Engineering Procurement and Construction (EPC) contract, executed by Bruce Wrobel, CEO of Sithe Global and Sun Yonggang, Chairman of China Railway First Group, is valued US$506 million and will be the largest infrastructure contract ever executed in Guyana, the Government Information Agency (GINA) reported yesterday.

The signing signals an important milestone in the development of the US$840 million Amaila Falls Hydro project which is expected to start by mid-2013, it said.

It was witnessed by Singh, Guyana Power and Light (GPL) Chairman Winston Brassington, Office of the President Advisor Steven Grin along with representatives of the Province of Shaanxi, the China Development Bank, China Export and Credit Insurance Corporation, the Inter-American Development Bank (IDB), and other representatives of Sithe Global and China Rail.

Singh, GINA said, described the occasion as a historic moment for Guyana and for Guyana-China relations, while alluding to the strong historic relations between the two countries and the increasing role that Chinese enterprises are playing in the development of Guyana. He also stated that the Amaila Falls project presented an opportunity for these relations to enter a new phase as the project represented the single largest investment in Guyana and, one of the largest Chinese investments in the Caribbean.

“This transformational project is the single largest investment in Guyana and will allow Guyana in one single step to move from being almost entirely dependent on costly fossil fuels to being supplied almost entirely by renewable energy. We are delighted to have such credible partners recognize the importance of the project and be ready to invest private capital in Guyana,” he was quoted as saying.

“I am delighted to represent Guyana at this historic milestone and I urge all partners to recommit their efforts to seeing the timely realisation of financial close and implementation of this project all the way to its coming into operation,” he added.

Wrobel, meanwhile, stated that Sithe was pleased to be associated with the project, which will make a huge difference to the people of Guyana.

He called it representative of the globalised world that we inhabit, while noting the many important players such as the CRFG, China Development Bank, IDB, the Government of Norway, and the Government of Guyana.

CRFG was founded in 1950 and is a state-owned entity, with over US$9 billion in annual revenue. It is part of China Railway Engineering Group, a company with over US$90 billion in revenue and the third largest construction company in China and, one of the top 100 construction companies in the world, GINA said. CRFG is headquartered in Xian, China. China Development Bank is one of the largest commercial banks in China with assets in excess of US$900 billion.  The project is being led by the Shaanxi branch of the China Development Bank, in Xian.

In January, Sithe Global had reported that financial closure for the project would have come by June 2012, since further delays could have seen the window of locking in a fixed price being closed and increasing the possibility of the final cost of the project escalating further. However, in a letter published in the press in June the company said financial closure was not possible before 2013, adding that its lenders remained supportive of the project.

The decision by the World Bank not to participate, however, stupefied officials of the hydro project developer, who said that the institution had always thrown its weight and funds towards similar projects around the world.

The Amaila Falls Hydropower project is a private sector project involving the construction of a hydropower plant at Amaila Falls on the Kuribrong River in the Cuyuni/Mazaruni with 165MW peak capacity, clearing an area of 27km2, as well as a 278km transmission line linking the plant to hubs in Linden and Georgetown. Government is contributing equity to the project.

Meantime, work is moving ahead on the access road to the project site and reports are that the work is expected to be completed by year end, when CRFG is expected to mobilise its equipment to commence works on the hydropower project next year.

The hydropower project began amid controversy when the government awarded a US$15.4 million contract to Fip Motilall’s Synergy Holdings Inc to construct the access road. After delays, the government eventually cancelled the contract in January this year.

From the outset, the contract awarded by the Bharrat Jagdeo administration, had been the source of major controversy. It was argued that Motilall had never built roads of the type he was being awarded and that he should never have gotten the contract. Despite this, the contract was awarded and from the very start he fell behind contract deadlines.

The contract awarded to Synergy was for “the upgrading of approximately 85 km of existing roadway, the design and construction of approximately 110 km of virgin roadway, the design and construction of two new pontoon crossings at the Essequibo and Kuribrong rivers.” The fourth part of the project is for the clearing of a pathway alongside the roadway to allow for the installation of approximately 65 km of transmission lines. It was subsequently re-tendered and its completion is being undertaken by several local contracting firms.