Sithe Global in stirring appeal for Amaila support

Sithe Global on Monday made an appeal to the parliamentary parties to support the Amaila Falls Hydropower project, saying that it would be forced to walk away from the US$858.2 million venture, since anything but a firm commitment on consensus will be an acknowledgement that after six years of effort and US$16 million, the country is not prepared to proceed.

In a letter to Stabroek News published in today’s edition, Sithe outlined the benefits of the project and its firm resolve to exit if there is no consensus. Today’s session of Parlia-ment will decide whether there is majority support in Parliament for the Amaila project.

Sithe Global is the developer of the hydro project and is contributing a portion of the equity, together with the Government of Guyana. Loan financing is expected to come from the Inter-American Development Bank (IDB) and China Development Bank (CDB).

“Sithe Global has spent six years and US$16 million to develop this project because we believe that it will be transformational for Guyana in many ways.
In addition to providing reliable electricity and substantial cost savings, the project will generate hundreds of local jobs, having significant economic impact on the country,” Sithe said.

“The project has been vetted by numerous third party firms and has been determined to be Guyana’s ‘least cost’ power option. Bids were sought and received in a transparent and fair process by five international construction firms with the lowest cost contractor, China Railway, chosen,” said Sithe.

“The technical development of the project is done – design drawings supporting the start of construction are complete and have been reviewed by two independent parties, including MWH Global, one of the world’s leading hydropower design firms, in addition to China Railway,” the letter said.

It noted that the Inter-American Development Bank (IDB) and China Development Bank (CDB) are completing due diligence and preparing to seek final internal approvals by the end of October.

“However, Sithe Global cannot continue its development efforts without the same level of commitment from our partners in Guyana.

We can only proceed further if there is a uniform consensus among PPP, APNU and AFC, communicated via Parliament, that you support this project,” Sithe said. “Without such consensus, Sithe Global will be forced to withdraw,” it said.

“The unfortunate consequence is that it would be many years before any similar project could be resurrected and, as such, Guyana would remain saddled with a 19 US cent cost of power and complete exposure to fuel price swings from imported oil,” said Sithe.

“It would be our honour to work with Guyana to carry through this important public-private partnership, if we have the collective support of our future partners.
We hope you are willing to take this momentous step towards securing reliable, low cost energy that would help fuel Guyana’s economy for generations to come,” Sithe said in the release.

“The math is simple. In 2012 GPL’s cost of generating electricity was 19 US cents per kilowatt hour (kWh).

This price is among the highest prices paid for generated power in any part of the world. Government subsidies currently reduce the ultimate impact on the tariff paid by GPL customers, but these subsidies come from your tax dollars,” said Sithe.

According to Sithe, in the first 12 years of operation, the project is expected to generate savings of 40 percent or nearly US$1 billion or $200 billion compared to GPL’s 2012 cost, as the project’s tariff is expected to average approximately 11 US cents per kWh.

“In years 13 to 20 of operation, the Amaila project is expected to generate savings of 70 percent or US$1.15 billion or $230 billion compared to GPL’s 2012 cost, as the project’s tariff is expected to average 5.5 US cents per kWh,” Sithe said.

It said that the project is then transferred to Guyana for free after year 20 and will generate savings for Guyanese rate payers of over 90 percent or nearly US$15 billion or $3 trillion over the remaining 80 year life of the project compared to GPL’s 2012 cost, as operating costs are expected to average less than 2 US cents per kWh.

“All of the above assumes that fuel costs never go up for the next 100 years. If fuel prices do go up, the savings go up further,” Sithe said. “The analysis further ignores the secondary benefits of cheap, reliable electricity, which will support higher GDP growth for Guyana,” the letter said.
Financial close is expected before the end of the year.

Further, the validity price window for the project ends on December 31. 2013.

While the AFC has sounded its willingness to support two critical pieces of legislative instruments – namely the Hydro Power Amendment Bill and the Motion to raise Guyana’s external debt ceiling – the APNU wants more disclosure before giving its all clear in the National Assembly. Prime Minister Sam Hinds on Saturday expressed the hope that the parties in the House are able to reach an agreement that would see the eventual passage of the bill and motion. The Opposition at the sitting of the National Assembly on July 18 voted against the bill and motion citing lack of information on Govern-ment’s part.

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