After review, the AFC says its parliamentary actions on the Amaila Falls hydro project were consistent with its commitment to Guyanese and cautioned that the collapse of the deal makes it clear that foreign investors in substantial undertakings now require the approval of all major stakeholders.
In a statement issued on Sunday, the party’s Chairman Nigel Hughes reiterated the AFC’s support for a well thought out hydropower project where all pivotal questions have been answered. He also addressed the party’s stance on two matters in Parliament
related to the Amaila Falls Hydropower Project (AFHP).
“… the Alliance For Change, 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,” the statement said.
Hughes declared that the party is convinced that it acted in a “patriotic, rational and responsible manner to safeguard both the people of Guyana and the project”, by approving parliamentary action to increase the loan guarantees for public corporations.
He said that it was the AFC’s considered opinion that this course of action would have given a lifeline to the project and would have paved the way for the Inter-American Development Bank (IDB) to conduct a thorough review so that the AFC could make a decision on the viability of the project. He said that the IDB had stated that its due diligence would be conducted on three principal areas:
1) whether GPL has the capacity to handle the administering and management of the large amount of electricity after Amaila is completed;
2) whether there is economic viability in the project, that is, if Guyana’s economy can sustain it to become viable for the tariffs not to increase;
3) the environmental feasibility.
He said that after analyzing the outcome of the IDB’s due diligence, the AFC would then have had sufficient information to determine its final position on the project.
The AFC’s position on the two Amaila measures had been clouded by the fact that on July 18, 2013 it had voted against both. However, by the time the government returned the measures to the House on August 7, 2013 the AFC was prepared to support both. The AFC had also voted with the government to have both matters re-enter the order paper on August 7 even though this was a most unusual practice as the matters had already failed and should not have been brought back in this session. The AFC’s plight was further exacerbated when on August 6, 2013 Hughes tendered his resignation from the party when it was revealed that day that he was the company secretary for AFHP, the special purposes company that had been set up to steer the Amaila project. The party had not publicised this role at the time that Hughes had assumed chairmanship of the AFC in July, 2012. Hughes had quit to avoid any suggestion that his role as company secretary was influencing the party’s position on the Amaila project. The role of Hughes’ wife and AFC MP, Cathy Hughes as a public relations aide to Amaila investor, Sithe Global also posed difficulties for the AFC. The party subsequently rejected Nigel Hughes’ resignation and defended its decision to back the two measures as offering a lifeline to the project pending a due diligence on it by the IDB which would in turn guide the AFC’s final position on the project.
Hughes in his statement on Sunday said the AFC believes the project was handled badly by the government from the inception, with no formal project document being laid in the National Assembly. He also charged that there was no attempt to seek early political consensus neither was there evidence of a formal and transparent tender process for the identification and selection of the project’s developers.
The AFC Chairman said that the failure to share critical information on the project with the political opposition while in talks with the developers for the last six years called into question the sincerity of the government’s last ditch efforts to win support from all political parties.
“The AFC is today rising as the conscience of the Guyanese people, as we say and do what is in their interest. We share and feel the people’s heart-beat for affordable renewable energy security not only from hydropower but from a portfolio of sources including ethanol, wind and solar power, and co-generation using bagasse and wood waste.
“Therefore we have every reason to support the development of hydropower in Guyana but with the clear caveat that it must be environmentally, socially and economically feasible. We are not going to support any project that throws good money over the waterfalls,” Hughes declared.
He said the leadership of the party has had serious consultations which have revealed that AFHP could satisfy the minimum requirements of the IDB’s Environmental and Social Management Report and this is what had led it to support the bill dealing with the flora and fauna around the Amaila area when it returned to Parliament on August 7.
“We have come to recognize over these last two weeks that this has been misinterpreted by many to have been a vote for the Amaila Falls project itself. Nothing could be further from the truth and one must recognize that the AFHP has never come to the parliament for debate, consideration or approval. “Unfortunately given our current political landscape many have deliberately taken advantage of this misunderstanding. This we find most regrettable,” Hughes stated.
He added that the vote in favour of the bill and increasing loan guarantees did not mean that the AFC would sweep aside its concerns over the project.
“Our biggest concerns remain the key debt assumptions, the cost of finance, the lender’s fee structure and the advisory costs. We provided our word to the government to respect the confidentiality of the details and thus professionally we cannot release those details in this presentation, but the numbers do not add up to our satisfaction. In this regard, we have made our position clear: our full support would be reserved until the IDB completes its Economic Feasibility Technical Report (economic due diligence).” Following the collapse of the Sithe Global-led project that due diligence appears dead in the water.
Hughes added: “The sad episode is now over but we must not lose the lessons of the experience.
1. Projects of national nature which involved substantial investment must include all stakeholders from its conception.
2. Every effort must be made to recruit and involve the best negotiating team to represent the country in any negotiations on the project.
3. Foreign investors in substantial projects in Guyana now require the approval of all major stakeholders.” The latter point refers to the fact that the opposition has a majority in Parliament.