Inter-American Development Bank (IDB) Representative in Guyana Sophie Makonnen says the due diligence the Bank is presently carrying out on the proposed Amaila Falls hydroelectric project has experienced delays and notes that while such delays are not unusual for this type of project, the access road’s completion is a key condition to the process.
It had been expected that the due diligence would come to an end by the end of July however this will not be met. Makonnen did not give a new date by which time the due diligence is expected to be completed.
“Due diligence is on-going and given the complexity of the project some delays have been encountered,” she said in an email response to Stabroek News. Makonnen said however that such delays “are far from being unusual” for this type of project.
“It is important for us to have gone through a thorough review of the project requirements and impacts,” she said.
She said too that the road component of the project “indeed is a key condition” to start the hydro project. The road has experienced many delays and changes to contractors and Minister of Works Robeson Benn is on record as saying that the road may not be completed before the end of this year.
The due diligence is being done to determine whether the IDB will participate in the financing of the US$840 million project. It is believed that financing from the IDB in the neighbourhood of US$175 million is a must for the project to reach financial closure.
IDB sector specialists will review and appraise the project from an institutional, financial, environmental and social perspective during the course of the bank’s due diligence. Makonnen had earlier told Stabroek News that the size and nature of a loan for the project will be defined at the end of the due diligence process.
According to the IDB Representative, the due diligence process will include the requirement that a programme be agreed upon by GPL to continue reducing electricity losses. It will also seek to ensure that the project strictly complies with the IDB’s environment and social safeguard policies. These she said cover a wide range of aspects from the environment to involuntary resettlement and disaster risk management.
During the due diligence process the bank will ensure that both project developer Sithe Global and the power purchaser GPL have the technical capacity to manage the Amaila project, Makonnen said. The bank will analyse the cost factor and other risks faced by the project as part of the due diligence process, Makonnen had said, adding that this is because increasing costs are a perennial concern for infrastructure projects all over the world. She said that the study will assess the potential for cost increases and look at whether the risks are within a range that is reasonably acceptable.