Dear Editor,
After reading your news article, ‘Jagdeo says of analysts: “They killed the hydro,”’ (August 16), I think Mr Bharrat Jagdeo should be publicly ridiculed for helping paint what is now the portrait of a problematic project. If only he had not treated it with such secrecy and allowed it to become a magnet for cronyism and waste. But he can rest assured, Amaila is not dead, but asleep and can and will be resurrected. He just has to stay away from it. Sithe Global withdrew its support from the 165-MW Amaila Falls hydroelectric project, citing Guyana’s inability to reach consensus on a number of key legislative arrangements needed for the plant’s development, but according to the August 12, 2013 edition of HydroWorld.com, Sithe Global has said it would likely resume its support of the project, should the government reach an agreement in support of its development.
This may explain why President Donald Ramotar is gingerly reaching out to APNU, and it would do the regime well to do its homework, which includes ceasing its attacks on the opposition and simply waiting on the IDB’s October findings. The entire political ruckus over the project should not be blamed on the opposition, Editor, because prior to November 28, 2011, the PPP enjoyed a parliamentary majority when the project was first presented to the Jagdeo regime in 2002, yet the regime failed to use its parliamentary majority to implement the project that should have taken three years to complete. It was that failure which has since allowed the combined opposition to start asking the hard questions, including wanting to know how the project’s estimates went from an original US$300M to a staggering US$858M and the potential to climb over the billion dollar mark.
With Sithe Global waiting to see if there is political consensus in Parliament, the nation is now left to see what will be the IDB’s findings on the project in October, because the IDB is expected to pony up about US$175M towards the project, and its big brother affiliate, the World Bank, is quite experienced in financing hydro development, one example of which SN reported on as recently as August 14 related to the Great Lakes.
As an aside, the Alliance For Change (AFC) did get it right originally when its leader declared that since the party did not have the means of accessing hydro experts, it would then wait on the IDB findings before voting for the project to go forward.
Editor, indulge me at this point to cite the 250 MW Bujagali hydroelectric facilities in Uganda, built by Sithe Global, as one of the of the many WB-financed hydro projects that could be helpful to Amaila. I single out Bujagali in Uganada, because Bujagali, like Amaila, was hit by several start-up problems, and because Uganda, like Guyana is a Third World country, and the WB, which played a role in Bujagali will be playing a role via the IDB in Amaila. And this is why I am saying that Amaila is not necessarily dead, we just need the benefit of the WB/IDB’s expertise in hydro development, and hope the similarities between the two nations and projects may be helpful in getting us closer to the bigger and better picture.
In February 1996, the Ugandan government signed a US$450M pact with US energy firm AES Corporation to construct a dam with 2004 as the scheduled completion date. In December that year, the cost increased to US$520M. In June 2002, two construction firms Veidekke and Skanska pulled out of the deal. The government asked AES to lower the project cost. In August, AES was hit by a financial crisis and pulled out of the project. In September, the government invited new developers, and in February 2005, firms submitted bids, which saw a consortium of Industrial Promotion Services (IPS) and Sithe Global emerging as the best.
In December 2005, state-owned UETCL signed a power purchase agreement and implementation agreement with Bujagali Electrical Limited (a company formed by Sithe and IPS). In May 2006, the World Bank Board of Directors approved a $360M loan in support of the project. In June, the Ugandan government advanced $90M to BEL. In August 2006, President Museveni and Aga Khan laid the foundation stone. August 1, 2012 marked the commencement of the commercial operations date of the 250MW Bujagali Hydropower Project.
Before and during the construction, concerns were raised about the social and environmental impact of the project and it was suggested that consideration be given to alternate energy sources, like geothermal and solar energy. But despite those concerns, as well as the rise in construction and line transmission costs from the original US$450M to the final US$900M, the WB kept faith with the project. For Guyana, the WB and IDB will be using past hydro projects to make a determination on a number of factors, including social and environmental impact and construction costs, and if they believe the benefits will outweigh the concerns and costs, they will green light the project. Editor, if it can be of any comfort or assurance to Guyanese concerned about Amaila, permit me to share this Bujagali update. On Thursday, August 8, 2013, under the caption, ‘One year on: Bujagali doubles power supply,’ the Ugandan Observer reported Bujagali Energy Limited (BEL) General Manager John Berry as saying that the facility increased Uganda’s power generation capacity by 44 per cent, almost doubling the country’s electricity supply over a year since it was officially switched on August 1, 2012. Thomas DeLeo, Chief Operation Officer of Sithe Global – one of the operating partners, says Bujagali has caused electricity supply to surpass the demand for the first time and was even supplying electricity to neighbouring Kenya, without affecting Ugandans. He noted that the project’s ability to increase generation at peak time has helped eliminate load shedding, which used to last up to 12 hours every day. Load shedding, he added, undermines a country’s competitiveness by affecting the country’s industrial production capacity, mining and services. DeLeo says that for a country to get its priorities right, a constant supply of electricity is a major driver of investment. “There were a lot of doubts so today we want to say that every single query has been put to bed whether on amount of power, cost of power or the dam’s impact on the environment.
This project has been delivered on time and within the budget. Today we can say that despite all the questions which were raised, you can see it has been a success, Uganda now exports power to Kenya,” DeLeo said. “It is not what you have been listening to … it is what you can see. Load shedding is not a generation issue any more but rather a transmission and distribution issue. Some people thought Bujagali would never do 250 megawatts but we provide it at full capacity at least 4 hours every day. We have delivered and exceeded the delivery you expected of us,” DeLeo said, during an inspection of the power plant in Jinja.
The Bujagali Hydropower project was established through a public-private partnership between the Government of Uganda (GOU), the Aga Khan Fund for Economic Development and Sithe Global. They formed BEL to own and operate the power plant on a 30 year concession period which will be transferred to GOU after 30 years. BEL has also committed $2.8M on projects in its area of operation that includes education, water, sanitation, reforestation and rural electrification. That Bujagali story that started out with near tragedy and ended in national triumph can be Amaila’s, but we need a government that knows how to cooperate, compromise and be clear and courteous.
Yours faithfully,
Emile Mervin
