Amaila hydropower project hinges on IDB feasibility report

-July deadline set for gov’t to indicate intentions

Government has until early next month to indicate to the Inter-American Development Bank (IDB) whether it intends to continue with the Amaila Falls Hydropower Project (AFHP) with the decision hinging on an economic feasibility study done by the Bank.

Minister of State Joseph Harmon told reporters at his post-Cabinet media briefing on Wednesday that a lot would depend on the results of the study which was expected to be presented to the administration that day. The IDB is holding US$80 million from Norway in its accounts as Guyana’s equity in the project and Guyana was also seeking a loan from the Bank for the AFHP.

Last Friday, President David Granger in an interview with Stabroek New had indicated that his administration was unlikely to proceed with the project though it is still interested in hydropower. He had said that they wanted to gather more information before making a final decision.

Harmon, on Wednesday, revealed that Cabinet had examined the project and a report on it was presented by Minister of Public Infrastructure David Patterson. Both the AFC and APNU had expressed concerns about the economic viability of the project in the last Parliament, and, according to Harmon, while the combined opposition had given their limited support to the expansion of the area to be flooded and the raising of the debt ceiling, they had also stated that they would have awaited the result of the IDB’s economic feasibility study.

The minister reported that IDB vice-president Alexandre Meira da Rosa and General Manager for the Caribbean Department of the Bank, Gerald Johnson are in the country and it was expected that a report would be given on the status of the feasibility study. “We would await that report and we will make a firm decision on the way forward once the team comes and presents its statement on the matter…” he said. Stabroek News was told yesterday that the two sides met but the study was not handed over.

When in opposition, both APNU and the AFC had criticized the Bharrat Jagdeo and Donald Ramotar administrations for the lack of transparency surrounding the AFHP. The AFHP was the flagship project of the Low Carbon Development Strategy and was supported by Norway but has struggled to get off the ground even as it was enveloped in several controversies. Norway last year transferred US$80 million earned by Guyana for limiting deforestation, to the IDB as Guyana’s equity in the project.

Since the project was first announced, costs of the 165-megawatt hydro venture have escalated from the original US$450 million to US$858.2 million up to 2013. The costs for the access road had ballooned from US$15 million when the contract was signed in 2010 to US$43.5 million last year.

Meanwhile, Harmon said that with respect to Brazil and its hydropower proposals, the new administration has to re-enter into conversations with Brasilia to see if a better deal could be reached. “We are fresh, we are a new government. We had a government that has been here for about 23 years or so and, therefore, I believe some countries might very well decide to cut you some slack because they recognize that the image of this country has been severely tarnished abroad, and so for us to reverse that image, we need to ensure that the people we put out there that negotiate contracts internationally, that represent our interest internationally, are people who have the interest of Guyana at heart first and foremost,” Harmon declared.

On whether the Brazilian-proposed hydro projects would supersede Amaila, Harmon said that the consultations are still at a very early stage. According to him, government is looking at Brazil in a broader sense, not only in relation to hydropower but also as it relates to the entire commercial arrangement for roads, cables and infrastructure of that nature. This, he said, will be part of a bigger package of developmental works that will be discussed.

In relation to the $3.1 billion ICT project which includes the laying of a fibre-optic cable from Brazil and which commenced in January 2011, Harmon said the manner in which it has been executed will be reviewed.

“I am looking at several things in this regard because we are spending money on a daily basis on some of these projects and we may have to just draw the line and say ‘well look, no more work until such time as we decide what is to be done here’,” he said. He added that government is now in the process of gathering information from which informed decisions can be made.

The Minister of State pointed out that government has to prioritise the projects being examined. Those that have to be dealt with immediately are those for which sums have been spent and on which the government is paying fees to the international banks. “That would have been a motivator on which of these ones we choose immediately,” he said. He singled out the Amaila hydropower project saying that there is an IDB deadline and the Bank has asked Guyana whether it will continue with the project.

Meantime, Harmon said that he has found that in relation to a number of international agreements entered into by the past PPP/C administrations, “the quality of negotiations was very poor. In some cases I have seen contracts signed on behalf of this government with foreign government and foreign entities that…you probably just take somebody and google contracts on the internet and then you sign.”

The minister said that during the Tenth Parliament, he had questioned the former attorney general about some of the contracts including Atlantic Hotel Inc (AHI), the owners of the

controversial Marriott Hotel, but the then AG had said that he did not know much about it since he was not a part of the negotiations.

“What we have found is that at the initial stages of a project, initial investigation, that if you do not do it well, you lose at the bottom end and this is what has been happening. We are looking at the bottom end because we did not negotiate properly at the top end,” Harmon said. The AHI project is ongoing and, as such, the government needs to make a decision on that quickly, he said.

Harmon also related that Cabinet was encouraged by the recent visit of officials from the Ministry of Foreign Affairs of China as well as the General Manager for the Caribbean, Latin America and South America division of China Harbour Engineering Corporation. It was felt that the visits by those high level officials signalled clear intentions on their part to ensure that relations between the two countries do not suffer as a result of the projects lagging.

Harmon said too that over the past few weeks, the Chinese government during interactions with the administration, has indicated their willingness to assist in looking at the country’s infrastructural development. He added that government outlined a general vision through President Granger which speaks to government not utilizing grants and loans from the Chinese government for “small projects” but rather a major infrastructural project which links the hinterland with the coast.

“That is to say, we are looking at rail, we are looking at bridges, tunnels, aerodromes and major infrastructural projects that will move this country forward and that is the kind of vision which we outlined to the official from the Chinese government who came here during the last week, and that is also the vision which we gave to the China Habour general manager who came here also during the last week,” Harmon said.

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