No agreement has been reached by Russian aluminum giant, RUSAL and Brazilian construction firm, Andrade Gutierrez (AG) Construction on the possible joint development of a hydro electricity plant in the Upper Mazaruni but discussions are ongoing.
The Guyana Government in a statement said that it noted a report in the Stabroek News yesterday which was headlined, ‘RUSAL, Brazil company still talking about massive Kurupung hydro project’ adding that it wanted to clarify the status of discussions on the project.
The statement said that in September 2009, when the Takutu Bridge was officially commissioned by President Bharrat Jagdeo and Brazil’s President Luiz Inacio Lula da Silva, Lula announced Brazil’s interest in establishing an 800 MW hydro project in Guyana. He signaled then that a high level team would be sent to Guyana to further discuss hydro, the statement said.
The statement recounted that on October 1 last year, Jagdeo, Prime Minister Samuel Hinds and a government team met Brazilian Minister of Energy and Mines, Edison Lobao to further discuss Guyana’s hydro-electricity potential and how the two countries could work together to further the exploitation of that potential. Lobao led a 12-member delegation that included persons from Brazilian electricity company, Electrobras. “As part of the meeting, it was disclosed by the government of Guyana (GoG) to the Brazilians that the Turtruba Project was held by the ENMAN group, pursuant to a Memorandum of Under-standing (MOU) entered into on July 31, 2001 and executed by the Prime Minister, and suggested that Brazil look at alternative hydro sites”, the statement said.
It said that as part of its examination of alternatives, Brazil identified the Upper Mazaruni hydro project (the Kurupung project). Government disclosed that this site was covered under a letter of Intent (LOI) entered into in 2007 between the GoG and RUSAL. Under this LOI, RUSAL had started preliminary feasibility studies for the development of an integrated aluminum complex (including a refinery and smelter), the statement said. “Given the existence of this LOI, government indicated to Andrade Gutierrez (AG) that the two parties (RUSAL and AG) could pursue direct discussions on the possible joint development of this project”, it added.
“In 2010, RUSAL and AG engaged in direct discussions on the possible joint development of this hydro project. No agreement has yet been reached by the parties. The report in SN of today (yesterday), appears to present matters that are being discussed between RUSAL and AG”, the statement said.
It went on to say that providing that RUSAL and AG reach an agreement, this agreement will have to be presented to the GoG for its consideration and approval. “If approved by the GoG, development of this project would also require completion of all applicable feasibility studies including an environmental impact assessment (EIA)”, the statement said.
It said that subject to the applicable studies, should all the parties agree on the future development of this hydro project, power from this project will be earmarked for use by Brazilian northern states and Guyana (including power for an aluminum smelter).
This newspaper had reported yesterday that interest remains in developing a 3000 megawatt hydroelectricity plant in the Middle Mazaruni with talks about two consortiums involving RUSAL, the government of Guyana and Brazilian electricity company, Electrobras.
In a recent letter sent to Gianfranco Miceli – the Director of Business Development of Andrade Gutierrez Construction, by RUSAL General Manager Alexey Gordymov, it was stated that the Russian company is ready to further develop the project at Kurupung if certain terms are accepted. This hydro-power project had been floated many times in the past.
In the letter dated May 14, which was seen by this newspaper, Gordymov told Miceli that he hoped that their meeting in Miami in March this year was productive and at least the parties could exchange their intentions and recognise how they could move the project forward. He recalled that despite efforts they could not find any amicable solution at the time. He recalled that during the March meeting it was understood that one of the crucial points for Miceli was to get Electrobras to be part of a consortium. He mentioned the building of a smelter. After numerous internal reviews and discussions, they would like to continue dialogue on the main principles, Gordymov said.
He outlined six points. According to the letter, Consortium A would be created with three main stakeholders: Electrobras, the Government of Guyana and Rusal. “This consortium would be responsible for developing the Hydropower Plant and distribution of energy”, Gordymov wrote. He said the consortium would build a 3000MW hydropower plant which would be done in three phases. He said that the first 1000MW would be sold to Brazil “beside what is energy required by Guyana” and the second 1000MW “(probably less)” would go to the smelter. The third 1000MW would be sold to Brazil, he said. He outlined Consortium B – which would be created between the government of Guyana and RUSAL for the construction of an aluminum smelter. “RUSAL would control the consortium”.
According to the letter, Consortium B has a right to declare an option to use energy in the second phase of up to 1000MW “in case smelting capacity will be built before commissioning 2nd phase”. Such an option has to be declared no later than six months after the commissioning of the first phase, Gordymov outlined. He said that if this option is not declared by Consortium B within that time then Consortium A has a right to use the energy of the second phase at its own discretion. In this case, the third phase will be developed by Consortium A when Consortium B decides that the smelter is needed, according to Gordymov.
He said that the Consortiums will enter into a written agreement where Consortium A will guarantee to supply power to Consortium B in the requested amount for smelting but no more than 1000MW at a cost basis price. “We will appreciate your feedback on this message and would like to point (out) that we are ready to develop further this project in case you accept (the) above main terms”, Gordymov wrote. He added that any final deal is subject to contract.
