Unexpired Sithe licence poses dilemma

–gov’t source

The Amaila Falls hydro project licence will expire at the end of the year and while one option would be to have it run out, other options for wresting it from the hands of Sithe Global will require very careful consideration given their implications, said a Government source last night.

Speaking with this newspaper yesterday, the source said that the options other than allowing the term of the licence to run out must be approached with caution as Sithe Global, which now holds the licence, has spent millions on the relevant studies in their development of the project.

“If you rush into a decision, you could jeopardise such arrangements for the future,” said the source. The person directed further inquiries about the licence to Prime Minister Sam Hinds, who has responsibility for energy. Up to press time there was no response from Hinds on the question of what happens to the licence.

Over the last few days, commentators have asked about the status of the licence now that Sithe Global has formally announced their pull-out from the project. They have all insisted that the licence must be revoked or handed back to the Government as there is a risk of Sithe wanting to sell to someone else.

The licence was transferred to Sithe Global in 2009 following Synergy Holding’s handing over of the project development to the American firm, a subsidiary of the Blackstone Group. Original Amaila Falls developer, ‘Fip’ Motilall, would have been paid US$12 million at the financial closure of the project.

Synergy Holdings Inc. and its minority partner Enventure Inc. transferred the licence to Sithe Global – the developer since 2009. The licence had been renewed numerous times.
In answering critics about the licence transfer, Motilall said that the Hydro Power Act is clear on this.

“When Sithe Global came on board and they were about to embark on this multi-million dollar investment to do the feasibility and environmental impact study of the project, their board required full control of the project. So they approached me saying that they wanted 100 per cent control. Right now Amaila Falls Hydro Inc. owns 100 per cent of the licence. They want to be able to make decisions on the fly and they did not want a minority partner,” Motilall explained in a recent interview. He said that at that time Synergy and Enventure had owned the licence on a 70/30 split arrangement.
“Upon Sithe’s insistence of being in full control we came to Government and asked that the licence be transferred,” he said, adding that this was in 2009. He said that for all of the outlays he made and the loans he took, a mathematical calculation determined that the sum of US$12 million was a fair sum to be paid to Motilall.

Stabroek News approached Sithe Global yesterday for a comment on what they plan to do with the licence but up to press time there was no response from President of Sithe Global Brian Kubeck.
Executive Director of National Industrial and Commercial Investments Limited (NICIL) Winston Brassington said that there is a small window for the resurrection of the Amaila Falls hydro project if the main opposition grouping, APNU voices its support for it. He said that if this is done, there is room for Blackstone to reconsider their stance on the project.

In a statement yesterday, the Alliance for Change (AFC) said it still believes there is a window of opportunity for the Amaila Falls Hydropower Project to remain on the table contingent on its thorough analysis and urged stakeholders to engage meaningfully and non-confrontationally.

“We urge all interested stakeholders to engage meaningfully, and free from confrontational and incendiary language, in an attempt to find a solution to what has become a national embarrassment,” said the AFC in a press release.

It noted that significant sums of “taxpayers’ money” have already been spent on the project. The AFC said, “If we are to salvage any of that, we must act now.”

The release said that the AFC after considerable review has determined that its parliamentary actions in relation to the Amaila Falls Hydropower Project were consistent with its commitment to the Guyanese electricity consumers, “as well as its commitments to renewable energy and to making Guyana an attractive venue for investors.”

“In light of what has since transpired, the Party is convinced that it acted in a rational and responsible manner to safeguard both the people of Guyana and the project, pending an on-going analysis by the IDB,” the AFC said in its release.  The AFC voted in Parliament with the government in favour of two Amaila measures after voting at an earlier session against.

“The AFC still believes that this Project was handled badly from the inception, with no formal project document being laid in the National Assembly, and no attempt made to seek early political consensus. Further, there is no evidence of a formal and transparent tender process leading to the identification and selection of the project’s developers. The failure to share critical information on the project with the political opposition, while negotiating with the developers for the last six years calls into question the sincerity of the government’s last minute efforts to achieve support from all political parties,” said the statement.

“Notwithstanding this, the AFC, in recognition of the advanced stage of the project financing process, and an appreciation of what it takes to bring a project of such magnitude to this stage, took a position to approve two parliamentary measures intended to support the project. Neither of these measures, as approved, present any risk whatsoever to the people of Guyana. The party wishes make it clear that it has by no means endorsed this project in its current form,” said the AFC.

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