Dear Editor,
The fiasco of the Amaila project keeps going down that infamous creek without a paddle with every utterance from this government. In his latest interview with Stabroek News at the Holmenkollen Park Hotel in Oslo, Norway on May 28, our President made a few statements that rather than douse the blaze end up adding fuel to it.
Firstly, because Synergy was accepted through the public tender process does not mean Synergy’s selection was completely proper. The public tender process in Guyana is flawed and broken. Christopher Ram has soundly questioned the legality of the National Industrial and Commercial Investments Limited (NICIL) operating the bid process that led to Synergy’s successful selection. NICIL is a state-owned private company operating outside of the Procurement Act and in effect, outside of the public tender process. You cannot fix a questionable transaction by pointing to the broken process that allowed it.
Secondly, the truth is hard to find. The numbers keep changing every single day it seems. The government says the total cost is US$616 million. Rafael Herz, Sithe Global’s Project Manager for the AFHEP says it is US$650 million. The government and the developer are already US$34 million apart without a single block being laid. The government and Sithe Global’s estimates for the transmission line are US$145 million and US$190 million respectively. Before this current interview, the government said the interest and contingency would account for US$165 million. Now, the President says it is US$150 million. When numbers change this seemingly whimsically, taxpayers should ask questions.
Third, I am deeply suspicious of that contingency fund of US$150 million to US$165 million allocated because this project is already at a ridiculously high cost per megawatt. At 154MW this project should cost between US$154 million to US$231 million to build and nothing more. This is based on experts’ range and recent examples from hydroelectric projects. Without the cost of the transmission line and the contingency funds, this project is costing Guyanese US$306 million. Even with the government’s numbers, this project is US$75 million to US$152 million higher than a reasonable project of the same size.
Fourth, the President claimed at Wakenaam in May 2010 that the cost of power to Guyanese consumers could reduce by as much as two-thirds. Now, the President says the reduction could be as much as 40% as per GPL. The President has to make up his mind on how much electricity costs will be reduced. This is a variance of 26% in a matter of a few weeks and the government is yet to produce the Power Purchase Agreement for Amaila so the public could assess these divergent claims. The people of this nation need to see the agreement.
Fifth, the President said the public should not be concerned about Africa. I disagree. Sithe Global built the Bujagali project in Uganda. That project has seen a cost increase of US$360 million to date and still counting.
Sixth, the President’s faith in the technical process and the public tender system does not obviate the fact that the process is flawed. The plethora of washed-away roads, floating wharves, collapsing stellings, broken bridges, white elephant factories, ghost hospitals and hollow hostels is evidence enough. The honeymoon period of fooling people by building willy nilly as a sign of progress has run its course. People want value for money. Taxpayers don’t want their hard-earned money taken by the taxman to be wasted. Value for money requires one to build at a cost that reasonably similar projects are being built for.
Seventh, the President is fearful of sitting on US$405 million in debt at 8% while waiting for Synergy to build a road in eight months. This road cannot be built in eight months by a company that has no reported or proven experience building roads of this magnitude. So, President Jagdeo should be prepared to pay that 8% interest on US$405 million for at least 12 to 16 months. That is US$32.4 million to US$43.2 million before the road is finished. Why would the government take the loan and pay interest of US$21.6 million while waiting for 8 months for Synergy to finish the road? That US$21.6 million will have to be repaid in the electricity bills of the Guyanese people.
Beyond the numbers, there are fundamental philosophical issues of governance here. This fiasco started with Mr Motilall and Synergy and has now grown into a tale of great proportions. Even if a project brings savings to a nation, isn’t there an obligation on the government to ensure that the taxpayers do not overpay in constructing the project? Isn’t there an obligation to maximise savings to the people particularly when the people are poverty-stricken? If every other contractor is building a similar project for significantly less, isn’t there a fiduciary duty on a government to obtain estimates from those contractors before deciding to build the project? This process of selection is just like the procurement process that President Jagdeo recently extolled when supporting Synergy’s selection, so what is wrong in similarly approaching several contractors to get the best cost and value for Amaila? The other key aspect of governance is that the government could at any time demand a review of the project. When issues of cost harass a project of this magnitude even before it commences, a responsible government must conduct a review. But then again this is the government that blithely overlooked its own consultant’s refutation of Mr Motilall and Synergy’s involvement in this project and proceeded to give them the green light. The truth is we live in a system where a government is afraid that showing competence by halting the process to conduct a review is a sign of political weakness.
President Jagdeo would like us to believe this is simply about savings. It is not. It is about maximizing savings, which is what people struggling for their daily bread need. But most importantly, it is about the right thing. If a project could be built for $1 and produce savings of 50% then it is logical that if the project could be built for $0.60 it would produce greater savings. It is not too late to do the right thing.
Yours faithfully,
Michael Maxwell
