Norconsult Report

In November 2015, Minister of Finance Winston Jordan told a Guyana Manufacturing and Services Association annual dinner and awards that Guyana and Norway had agreed to do a final review of the contentious Amaila Falls Hydropower Project (AFHP).

“I wish to announce that the government is in discussions with Norway to procure yet another review of this project. Norway seems keen to finance an independent review to, once and for all, pronounce on the viability of the project,” Jordan said in his address.

His use of the words “once and for all” connoted that the report would establish authoritatively whether or not the project was viable. The subtext to this was that both APNU and the AFC- which now comprise the government had been deeply opposed to this project on a variety of grounds including the lack of transparency, its cost and the final tariff to consumers among other areas. Their opposition to the project and that from other sections of society was just as intense as the then PPP/C government’s lobbying for it.

Clearly, the political stakes were high for both sides though what was crucially on the table for the people of this country was how to acquire clean and less costly energy to advance the country’s development.

Acceding to government following the May, 2015 general elections, APNU+AFC faced the reality that one of the country’s main green energy and sustainable forestry partners, the Kingdom of Norway, saw the Amaila Project as a key step towards securing Guyana’s clean and renewable energies ambitions. There was clearly pressure from Oslo to continue this project and to assuage it the government agreed to a final review.

The final review is in and notwithstanding a host of technical issues and caveats, the Norconsult report comes down firmly on the side of the viability of the AFHP and also makes recommendations for lowering the cost of what would be the country’s largest ever infrastructure project and the initiation of a second large hydropower project.

Some of the key conclusions of the Norconsult Report are as follows:

“The only realistic path for Guyana towards an emission free electricity sector is by developing its hydropower potential. The fastest way forward is to maintain AFHP as the first major step for substituting its current oil fired generation.

AFHP was prioritised as the first hydropower plant because it was the only project with a full feasibility study completed, it has a higher plant load factor than the alternatives, a smaller reservoir and a levelised unit cost in the same range as the most attractive alternatives.

“Amaila Falls alone cannot provide a 100% emission free power generation in Guyana. Other generating sources will have to be added in parallel like 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.

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

In parallel with preparations for AFHP, therefore, pre-feasibility studies will have to be carried out for promising candidates for the second hydropower project and a full feasibility study (would have to) be performed for the selected candidate.

“The environmental and social impacts of AFHP are well established in the performed studies. No resettlement is required and there is limited human activity in the area directly affected by the project…

“Other hydropower plants that could have replaced AFHP as the first hydropower project to be implemented, would require 1-2 years of investigations and studies, including environmental and social impact assessments meeting today’s standards, to reach an updated feasibility study stage comparable to AFHP.

“The first needed step for revitalising AFHP is (a) decision by the Government to maintain AFHP as the priority project in the transition to a green generation regime, as recommended in the “Initial Study on System Expansion of the Generation & Transmission System” of 2014 and reiterated in “Guyana’s Power Generation System Study” of June 2016, and thereafter to resume the planning of Amaila Falls with political consensus and understanding with all stakeholders…”

“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”.

All things considered, this was an unequivocal thumbs up for the  Amaila project. The first issue that the public will want this government to address is whether, politics aside, this is indeed the best clean energy option for Guyana.

The essential point being that the APNU+AFC government must nor turn away from this project simply because it was the brainchild of the PPP/C government and because both of the parties now in government had adamantly opposed it while in opposition. The entire basis of good government and good governance is being able strip away political hauteur and hubris from decision-making. This is the challenge the present government faces.

From its initial reaction, it seems that the government has already decided that it is not proceeding with the AFHP. The Ministry of the Presidency took the unusual step of issuing a press release with the report which it said “identifies several risks and flaws in the design of the project, which will threaten its long-term effectiveness and prove too costly and burdensome to the people of Guyana…” and was “indisputable evidence to support the position taken while in opposition that the Hydropower project in its current configuration does not meet minimum requirements to ensure its viability and longevity”.

The Ministry press release made no mention of the positive review of the project but did say that the governmant had studied the report and conscious of the specific needs of the country it had decided to utilize a mix of options starting with less risky ones such as solar and wind which had been outlined in the 2017 budget presented last month.

Though the Norconsult Report was available in draft form from September this year  with the final report dated December 12,2016, the government appears to have done an extremely rapid and efficient review of it considering the sloth that usually attends even less onerous issues such as judicial appointments. There was no indication what form the government study of this report took.

Were Cabinet Ministers the final arbiters on the report filled with technicalities or were experts invited to give a rapid assessment to inform the government’s final position?

It is unlikely that Norway would have balked at a request for at least a parliamentary-level review of the report with access to inputs from knowledgeables in the field. That would have been the appropriate manner to conclude consideration of this very important initiative which had generated intense debate among stakeholders all across the board.

A question of a different order is whether the Guyana Government bound itself to accept the positive review of the project that has now been delivered in the report. The answer to that question would appear to be yes. Is there wiggle room with Norway? Many of the possible alternatives were referred to in the Norconsult report and none appears to be a better prospect than Amaila.

Guyana would now have to convince Oslo that the energy mix presented in the 2017 budget is sufficiently ambitious and ground-breaking as the proposed AFHP. That could very well determine whether US$80m under the Norway forest protection deal is made available to the country and also the future of the arrangement with Oslo.

Whether the agreement with Norway continues is not as important as making the right decision as it relates to Guyana’s clean and affordable energy future. This is what the APNU+AFC government must carefully weigh.

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