Guyana, Norway to discuss forest pact renewal in January

-Sithe Global to be asked for key documents on Amaila hydro project

Guyana and Norway have committed to continuing their forests protection partnership which ended this year and further talks will be held next month even as both sides await a study on the contentious Amaila Falls Hydropower Project (AFHP), the flagship project of the first agreement.

“Both sides have committed to its renewal. The ambassador of Norway based in Brazil will be visiting in January and I think we will take things a step further so yes those talks are ongoing and we’ve both committed to renewing and continuing and renewing our relationship,” Minister of Governance Raphael Trotman said, responding to a question from Stabroek News at his post-cabinet press briefing yesterday.

Previously, a group of civil society organisations had expressed concern at indications that government was walking away from renewing the Norway-Guyana forests protection agreement

Under the Memoran-dum of Understanding (MOU), which was signed in 2009, Guyana could earn up to US$250 million in performance-based payments up to this year, based on an independent verification of Guyana’s deforestation and forest degradation rates and progress on REDD+ enabling activities. REDD+ is a global initiative that aims to reduce greenhouse gas emissions from deforestation and forest degradation. Guyana has so far earned US$190 million under the partnership.

In September, Director of Norway’s International Climate and Forest Initiative, Per Fredrik Pharo told Stabroek News that there are currently no discussions on extending the forests partnership between Guyana and Norway but talks can start when the agreed deliverables of the current partnership are met.

Delegations

Trotman noted yesterday that delegations from Guyana and Norway met in Paris on the sidelines of COP21 with the basis of the meeting being about the MOU and its renewal. Pressed on when a new agreement is likely to be agreed, Trotman said the current situation is like “a contract that has expired but the parties continue functioning as if it is still in force so whenever we actually sign the new MOU it would just be a formality because we are continuing to function as if we have an existing (MOU) though the previous one has expired we continue to function as if there is a MOU in place and we are relating to each other as such.”

Questioned on payments for results of the final year – 2014 – Trotman said there is just US$43 million left to be disbursed from the US$250 million. “There has been some sloth expressed in terms of some projects.

When the ambassador comes in January these are some of the things we’ll be looking at to see how we can move things faster,” he added. He said that disbursement of the US$43 million has to be based on projects that have been submitted.

The previous PPP/C government had not submitted projects in a timely manner, and so far, no project concept note has been seen from the new APNU+AFC administration.

Trotman said that representatives of the Inter-American Development Bank (IDB) were present at the December 9 meeting in Paris and the AFHP was raised. Norway had supported the Amaila project, which was the flagship project of the previous PPP/C administration’s Low Carbon Development Strategy and was envisioned to deliver a steady source of affordable, reliable, clean and renewable energy. The project was supposed to eliminate at least 92% of Guyana’s energy-related greenhouse gas emissions and it was said that this would likely make Guyana the world’s number one user of renewable energy by 2017.

According to the minister, the Guyana delegation reiterated its position that they could not support the AFHP as currently conceptualized, that viability was not assured and there were concerns related to the least cost at which it could be constructed for and the fact that they did not want to attract any debt in constructing such a project.

“It was pointed out that the previous due diligence efforts by the IDB were incomplete and inconclusive and that key conditions necessary to assure project viability did not meet with buy-in by potential partners include Sithe Global and China Rail. Concerns with the proposed governance structure of the project were also alluded to particularly with respect to the sharing of risk such as possible cost overruns,” Trotman said.

He restated that it was agreed that if a decision was made not to proceed with the AFHP, then consideration would be given for alternative uses of the US$80 million being held by the IDB as Guyana’s equity in the project. The money was earned under the partnership.

Trotman said it was also agreed that “we should also together look at a least cost study which should be completed by May of 2016.” He said it was further agreed that a review of the AFHP to determine its viability will be time bound and guided by clear terms of reference and will seek to identify satisfactory criteria for the government of Guyana to determine the project’s viability.

Limited information

The Norwegian government requested that the IDB do the review but the Bank has said that it only has limited information in its possession. “A lot of the (proprietary) information relative to Amaila is in the possession of Sithe Global and so both countries and the IDB are to approach Sithe to have that discussion about how we can access that information but we would expect that the review would be done in the first quarter of 2016,” Trotman said. Sithe Global was the developer for the project but walked away after the then opposition APNU did not support the project in the National Assembly.

Should the IDB determine that the AFHP is not viable, Trotman said that any other project has to be a clean, renewable energy project. The IDB is currently doing a least cost study of other hydro sites. According to the minister, government continues to receive scores of applications for persons to do hydro, solar, wind and other projects. He said that if Amaila is found to not be viable, the US$80 million can be used for one or more of these projects.

The minister also disclosed that the IDB and Norway seem to agree that the capacity building for the Guyana Power and Light (GPL) could be supported by some of the funds as well. He said hitherto, GPL was almost on its own and even if a hydropower project is successfully implemented, GPL’s management as well as lines and equipment would have to be improved to function near to an optimum.

Trotman said that it was noted by Norway that support for GPL to improve energy efficiency is a low carbon activity and may qualify for support from the Guyana REDD+ Investment Fund.

In terms of the US$42 million road to the Amaila Falls, Trotman said that it continues to be discussed at many cabinet meetings. “It is being unofficially used by illegal loggers and miners and others so government is yet to take a position but at the end of the day we can’t afford to see an almost $50 million US road not be in some use,” he said.

Meantime, Trotman said that Norway was keen to see Guyana become a member of the Extractive Industries Transparency Initiative (EITI), an international standard that seeks to improve natural resource revenue transparency. He noted that this process is ongoing. He added that capacity building and institutional strengthening are priority needs for Guyana. The delay in acceding to EITI has been one of the problems in the relationship with Norway.

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