Another company has been identified to replace Blackstone/Sithe Global as the developer for the Amaila Falls Hydropower Project (AFHP), President Donald Ramotar has said.
The President was speaking at the commissioning of a US$35 million power plant at Vreed-en-Hoop, West Coast Demerara on Monday. The Government Information Agency (GINA) reported that Ramotar said that government is working towards beginning the construction of the actual project before the end of this year. He did not say who the new developers were. It is also unclear what due diligence they were subjected to.
According to GINA, Ramotar characterized a report in one of the newspapers about the status of the proposed AFPH as “totally misleading.” Stabroek News had reported last week that despite optimistic pronouncements by government officials, progress on the implementation of the AFHP is likely to take some time with the Board of the Inter-American Development Bank (IDB) expected to approve a key loan for the project until June of next year.
GINA reported that a lot of work has already gone into the project and under the Low Carbon Development Strategy (LCDS), Norway has already transferred US$80M to the IDB.
According to GINA, at the end of 2014, the road works to the hydro project site were 95 percent completed, and if all goes well, the road will be handed over by March of this year. A total of US$28.9 million was spent on the project up to December 2014, since the project’s inception in 2010. It has an overall cost of US$43.5 million, GINA noted.
The report said that the energy sector has the potential to be an important revenue earner for Guyana and Ramotar also pointed out that soon there will enough capacity to export electricity. “When you look at the Upper Mazaruni with 4,000 megawatts capacity in that area alone, you can see that we can become a powerhouse in exporting electricity to our neighbours”. This has been recognised by stakeholders such as the IDB, he added.
There is a proposal, being mooted to have a regional interconnected system, he explained. “From Brazil’s Roraima State through Guyana, through Suriname, through French Guiana and back again to Brazil on the east that can allow us to develop our renewable energy resources even if we can’t consume all of it at the same time and we will have excess to export and become a major earner for our society,” GINA quoted him as saying. Solar and wind power can also be used the president added, noting the explorations currently underway for oil, “We have to build an energy sector that is flexible and capable of switching from one source to another,” he said.
Before US-based Sithe Global pulled out from here in August 2013 as the developer of the US$858.2 million, 165 megawatt hydro venture, the AFHP was shrouded in controversy as costs escalated.
Since the project was first announced, costs for the 165-megawatt hydro venture have escalated from the original US$450 million to US$858.2 million up to 2013. Recently, it was also revealed that the costs for the access road had ballooned from US$15 million when the contract was signed in 2010 to US$41 million last year.
Sithe Global pulled out of the AFHP in August 2013 citing a lack of political consensus. The company had issued explicit statements that unless all three parties in Parliament backed two measures for the controversial US$858 million project it would pull out. The measures were not fully supported and the company walked away.
The IDB had been expected to partially fund the AFHP and at the time of Sithe Global’s pullout, the Bank was conducting due diligence but that was halted before it was completed due to the pullout. The due diligence was being done to determine whether the IDB would participate in the financing of the project.
In his New Year’s address, President Donald Ramotar said that “within months” the government expects to achieve financial closure and the start of construction of the controversial AFHP. He had announced that Oslo had transferred US$80 million to the IDB as Guyana’s equity in the project. Prior to that, on March 27 last year, Ramotar told a news conference that the AFHP was being examined by the IDB board and they would hopefully be wrapping up soon. “As far as I know [the project] is back with the IDB Board and hopefully [the] IDB Board will be concluding on that in the not too distant future,” the president had said. At the time, he was hopeful that the proposed developers, Sithe Global, who withdrew in 2013, would be back on board.
However, based on documents seen by Stabroek News, both the IDB and the Norwegian Agency for Development Cooperation (NORAD) “estimate in good faith” that the IDB Board will approve a loan for the project by June next year.
With general elections set for May, observers note that both investors and financiers will adopt a wait-and-see attitude.