How long can the PPP keep up this charade?

Dear Editor,

At Thursday’s stakeholders’ meeting the President hosted to talk about the brick wall his regime ran into trying to move the AFHEP forward, it was clear the President either does not comprehend the magnitude of the crisis the project has generated or he has settled on the AFHEP as the only alternative to his failed dream of seeing Guyana produce oil during his term in office.

First, as Housing Minister, Mr Irfaan Ali, rightly said at the same meeting, the AFHEP is a public-private venture, except that the way it has ended up was not the way it started out.
The records indicate that the current format of AFHEP was drafted in 1997 by Mr Makeshwar ‘Fip’ Motilall, a Corentyne-born, Florida-based Guyanese chemical engineer. His company, Synergy, entered into an agreement with a foreign company named Harza International and together they presented the concept to the Jagdeo regime in 2002. The original price tag was US$300M before moving to US$450M.

Financing was divided thus: PPP government around US$100M, Sithe Global (building contractor) around US$100M, the CDB/IDB around US$175M and Synergy would source whatever was the remaining balance.  Plans moved at a glacial speed before coming to a halt as Harza pulled out in 2004.

Motilall then sold his ownership licence to Sithe Global in 2009. And then President Jagdeo winged to China that same year to secure a US$500M China Railway Bank loan for the project.

Then, according to a Memorandum of Understanding (MoU) signed on May 23, 2006 in the Office of the Prime Minister by Mr Motilall for Synergy Holdings Inc, Prime Minister Samuel Hinds as Minister with responsibility for energy, and the then Chairman of Guyana Power and Light, Ronald Alli, the Amaila Falls Hydro Electric Plant (AFHEP) should have begun generating power from August 1, 2010. Next Thursday, AFHEP should have completed three years producing electricity!

Since, as Minister Ali said, AFHEP is viewed as a public-private venture with the private players being the owners and operators for a 20-year period before handing it over to government via GPL, one has to ask: Why didn’t Sithe Global, the builder who now owns the project’s licence, be the one to secure the US$500M Chinese loan instead of Mr Jagdeo? With the project’s price tag now standing at US$840M and Guyana adding the US$500M Chinese loan it took to its original US$100M proposed investment, this means Guyana is now a 71% stakeholder, so why will AFHEP be owned by and operated by Sithe Global for 20 years? Besides other areas of major concern related to the project, how can President Ramotar not see the disturbing folly of this lopsided arrangement? The only thing more disturbing than this will be if Sithe Global sells its licence to the Chinese, since they will be AFHEP’s biggest creditors.

Editor, I did say that the President either does not comprehend the magnitude of the crisis this project has generated or he believes it is the only alternative to seeing Guyana produce oil on his watch.

In the latter case, an ardent supporter of his who also claimed he was a friend of the President, did mention to me months before the 2011 elections that oil production was a huge dream for the President and it was one of the reasons he badly wanted to run for office. Well, for the past 21 months, we have not heard any news about oil in Guyana, except the impact of its rising costs on our economy, but especially electricity generation.

So, did the President turn to the AFHEP as the alternative, but is not intimately familiar with its details, thereby explaining why his regime is being forced to now answer serious questions and seek refuge in public relations exercises like stakeholders’ meetings and intemperate outbursts like labelling opposition MPs by implication as political ‘terrorists’?

On the surface, it does sound plausible to have a project like AFHEP that will help reduce energy costs by 30% or 40% or 50%, but when the devil is beneath in the details of the actual costs and when the long-term feasibility is being questioned given that the WB/IDB is leery of Sithe Global because of Uganda’s hydro plant, it requires the President and his political subordinates to step away from the discourse or debate and let technical and financial experts deal with the project going forward.

The combined opposition has also made it abundantly clear that they are not opposed to the AFHEP; they just have questions and reservations about certain aspects of its costs and viability. Same thing is true about the anti-money laundering bill and the CJIA expansion.

The Marriott is a waste of taxpayers’ money because it is supposed to be a public-private venture, but up to now no one knows who the private players are.

Anyway, in a nutshell, trust me when I say that the government has done more to hurt than help its cause in this AFHEP brouhaha over the last few weeks. And it would do the President good to stop playing politics with this issue, because it is slowly appearing to some discerning observers that the government knows the AFHEP is not the most pressing issue right now, because it has to wait for the IDB’s report in October anyway.

The most pressing issue right now is local government elections, which the PPP is deathly afraid of staging because the results could be a harbinger of what Guyanese really think of it, so it seems to be using the AFHEP as a delay-deny distraction or the main talking point. The question is: How long can the PPP keep up this charade?

Yours faithfully,
Emile Mervin

Around the Web