Norconsult report on Amaila not ‘decision document’ – Norway

Norway says the Norconsult report on the Amaila Falls Hydropower Project (AFHP) is not a “decision document” but merely says that the project is worth another look.

This is according to Per Pharo, Director of Norway’s Inter-national Climate and Forest Initiative (NICFI), in response to questions from Stabroek News on Oslo’s position on the Norconsult report which championed the controversial project.

Norway’s position would appear to give the Guyana Government flexibility in deciding the way forward. Since the report has been issued, the government has used it to buttress its position against the AFHP, although the overwhelming position of Norconsult is in favour of the AFHP. Norconsult was hired to do a facts-based review of the project given the contention in Guyana over whether the project was feasible.

Per Pharo

“The report is the result on an independent analysis carried out by Norconsult, and not a decision document,” Pharo told Stabroek News.

“The report indicates that Amaila Falls is worth another look. It does not pretend to give sufficient evidence to justify a decision to go ahead with the project. Rather, it makes a high-level case that the project could be viable, and advises on approach for further exploring its merits.”

The main parties in the governing coalition – APNU and the AFC – have been opposed to the 165 MW AFHP on various grounds including its US$858.1 million price tag. However, Norway has appeared to favour the project and after the APNU+AFC government took office in May 2015, the two sides agreed in December 2015 for an “objective and facts-based” assessment of the AFHP for a decision on the way forward.

In Norconsult’s December 12, 2016 report, it was stated that the AFHP was the fastest way forward for Guyana to realize its green energy ambitions.

Aside from hydropower being the best green energy project for the country, Norconsult pinpointed Amaila as the best hydropower prospect and adverted to 2012 findings by Verlyn Klass.

Norconsult said Klass did an evaluation of the known alternatives and the larger ones were resized to match the projected energy demand here.

In addition to the Amaila Falls, Klass’ study considered the Kaieteur Falls, Turtruba Falls, the Upper Mazaruni, Arisaru and Oko Blue. Based on technical/economic/environmental/social considerations, Amaila scored 100 in the rankings. Kaieteur Falls was next with 74 with Turtruba at 57 and Upper Mazaruni at 47.

Norconsult said that a more recent study, ‘Guyana’s Power Genera-tion System Expansion Study’ by Brugman SAS (June 2016), also concluded that hydropower was the lowest cost option. This study pegged Amaila Falls as the second lowest cost option of the hydro plants in the study, slightly higher than Tumatumari.

However, the Tumatumari Project has a significantly lower plant load factor – 50 to 55% versus 70-75% for AFHP. This means that more back-up capacity would be needed if Tumatumari was chosen.

Norconsult added, “The Tumatumari reservoir would inundate 6-20 times larger area than the planned reservoir of AFHP with more extensive environmental projects.”

In addition, the studies for Tumatumari from the 1980s need to be raised to a feasibility study level including environmental and social impact assessments. Norconsult said Tumatumari may therefore be better suited as the second hydro development in the country as its location was suitable for sharing the transmission line with AFHP.

The report also said that “By restructuring the financial model, the risk for Guyana’s economy can be reduced. The annual payments from GPL may possibly be reduced by 20%, which are significantly lower than the current fuel costs paid by GPL for its oil fuelled generation.

The risk to Guyana’s economic stability would be at the same level with other projects generating the same amount of energy, as the investment would be of a similar magnitude.”

Responding to Stabroek News’ questions, Norway said its Minister of Climate and Environment Vidar Helegesen had met with President David Granger in Morocco last November and no special meeting has been requested to discuss the Norconsult report.

Minister of Public Infrastructure David Patterson last week said government will make a pronouncement this month on the recommendations of the Norconsult report.

The Norconsult report noted that Amaila Falls alone cannot provide 100% emission-free power

Generation in Guyana and that other generating sources will have to be added in parallel such as sun, wind and thermal production based on emission neutral fuel (bagasse) for back-up in the dry periods when the water flow to AFHP may be insufficient for full capacity operation.

It was noted that as the power demand is growing, and for reaching the goal of 100% emission free generation by 2025, as assumed by the Low Carbon Development Strategy (LCDS), a second hydropower plant of capacity comparable with AFHP will have to be commissioned by 2025.

‘Transformative contributions’

And with US$80 million currently being held by the Inter-American Development Bank (IDB) for Guyana from this country’s and Norway’s forest protection deal, Oslo says that if Guyana can show that the US$80 million will go towards a project which will that can assist the country in achieving its 2025 renewable energy goals, it will support that initiative.

“From Norway’s point of view, it is important that the funds set aside in the IDB holding account are used for projects that give transformative contributions to reaching Guyana’s goals. That is our constant – not any specific project as such,” the NICFI Director asserted.

“The important thing is that Guyana develops a comprehensive, cost-effective strategy to deliver on its pledge to get close to 100% green and renewable energy in their energy matrix by 2025. Norway stands ready to support the development of such a strategy, as agreed with President Granger in Marrakech. Norway could also provide assistance for Guyana to develop the most promising options in more detail,” he explained.

Public Infrastructure Minister David Patterson had reasoned that the Norconsult report was really about how to spend the US$80 million Norway funds. “…Very shortly, this month, we do intend to say to them [the Kingdom of Norway] this is how we should utilise the funds,” Patterson said while noting that “the idea should always be to be progressive and continue moving in parallel with the other studies and interventions.”

He said that the reason behind Norconsult doing the report did not stem from the feasibility of the AFHP as “no one is questioning the viability of the project at Amaila…The question of Norconsult was a question of what happens to the US$80 million which the people of Guyana would’ve earned (from the forest protection deal with Norway) and which is still in an account with the IDB,” he said, while pointing out that the agreement was slated to expire on December 31 last year.

Patterson told a press conference that the government was exploring other ways of utilising the money while the research and work was being carried out on the AHFP. “…While Amaila is a very good project which can be explored it was not the only option,” he said.

“Further, the Government of Guyana had indicated to the Kingdom of Norway that the time that has elapsed and the time that would be required to resuscitate the project was against us and that we were keen on establishing a green energy fund with the US$80 million,” he added, while pointing out that the idea was to have government agencies and private entities apply for grants to use to money to foster their own green energy programmes.

“…So the Government of Guyana was thinking that while we are finalizing and while we are working on the project we should not be stagnant and marking time and that was the genesis under which the Amaila Falls project review was undertaken.”

No plan

But while Norway holds to a pre-requisite that Guyana must show that it is on its path to 2025 green and renewable energy matrix, it says that to date it has not yet received from this country a work plan detailing its clean energy transition and how it intends to build on the Low Carbon Development Strategy.

“Norway is awaiting more details on the main pillars of the green economy and how it builds on the Low Carbon Development Strategy from 2009/2013,” Pharo had told Stabroek News back in November of last year.

Last week, he echoed that position saying, “Norway has not yet received such a plan from Guyana.”

In the 2017 budget, the APNU+AFC government set aside close to $1 billion for renewable energy and energy efficiency projects, which will include a large-scale solar farm at Mabaruma, according to Finance Minister Winston Jordan, who also announced plans to grant a range of tax exemptions for clean energy and recycling ventures.

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