The Inter-American Development Bank (IDB) last month entered into a technical co-operation agreement with the Guyana government amounting to US$1.2 million to partially fund studies for the Amaila Falls Hydroelectric Project (AFHEP) which will be used by the Bank to evaluate the feasibility of the project.
The Bank has often been mentioned by the Government of Guyana in connection with the controversial project but it is clear from the IDB’s announcement on the studies that a final decision has not yet been reached by it on whether the project is feasible. The technical cooperation project was not announced here in Georgetown though matters of this type usually are.
Under this technical cooperation agreement, a total of US$1,210,000 will come from the Infrafund to support the Amaila Falls Hydro Inc., in helping to partially cover the cost of preparing several studies. These studies will be used by the IDB to evaluate the feasibly of the AFHEP, the abstract of the technical cooperation agreement says.
“A substantial portion of the environmental studies for the Amaila Falls hydro project in Guyana will be ready at year-end,” a report in the Business News Americas quoted an unnamed IDB project official as saying. “The environmental studies will be used to determine if the IDB continues the due diligence phase in the lead-up to possible financing,” the report further stated. The studies partially financed by the Technical Cooperation include: the Environ-mental and Social Impact Assess-ment, the Hydrology Review, and the Off-taker and Market Assess-ment. There will also be the establishment of a panel of experts.
Meanwhile according to the information on the IDB website the total cost to produce the studies is US$ 2,517,000. IDB Country Represen-tative Marco Nicola told Stabroek News yesterday that it was the project sponsor that was funding the outstanding balance – US$1.3M ($260M) – on this aspect of the project. He also said that the IDB is still looking at the possibility of lending financial support to the project.
The environmental and social impact assessment will contribute to the overall feasibility evaluation of the Project, the abstract said. “These studies will be conducted by the Company at the request of the IDB in order to complement and improve the existing Environmental and Social Impact Assessment (“ESIA”) report.”
“The resources from the Infrafund and the Company will be used to improve the quality and quantity of information on flora, terrestrial and aquatic fauna, water quality, green house gas emissions, affected communities, potential cumulative and indirect impacts and other issues on the areas to be affected by the Project,” the abstract stated.
The purpose of the Off-Taker and Market Assessment is to “access the capacity of Guyana Power & Light (GPL), the off-taker of the energy to be produced by the Project, to perform its obligations under the long-term power purchase agreement without relying on resources from the government of Guyana or reducing or affecting the quality of its services to the population”. Studies will be performed to assess the operational and financial capacity of the GPL and conduct an analysis on the electricity market in Guyana.
The purpose of the hydrology review is “to confirm the ability of the Project to produce the energy that will be purchased by GPL under the long-term Power Purchase Agreement.” According to the abstract, “the hydrology review will be a key element of the overall analysis and design of the Project as hydrology will have a direct impact on the financial obligations of GPL.”
Further, a panel of experts will be established to “provide a review of, and guidance on, the treatment of environmental and social issues associated with the development of the project.” This panel will also advise the Company and the Government the IDB “on the status and likelihood of compliance of the Project with the applicable provisions of the IDB’s environmental and social safeguards policies”. The purview of the panel includes review of: the analysis of alternatives; the environmental and social impact assessment process (ESIA), including key issues and methods for preparing the ESIA, recommendations and findings; and mitigation, compensation and monitoring plans and arrangements.
The AFHEP consists of the design, construction, operation and maintenance of a 154 MW hydroelectric power plant and associated infrastructure to be located on the Kuribrong River. The Project is expected to include: i) four 38.5 MW Francis turbine-generator units; ii) two rock-filled dams constructed close to the confluence of the Kuribrong and Amaila rivers at the head of Amaila Falls, one on the Kuribrong River (19 meters high) and one on the Amaila River (36 meters high); iii) a 230-Kilovolts switchyard at the Project’s site and two new high voltage substations located in Linden and Georgetown (Sophia substation) respectively; and iv) a 280-kilometers transmission line (230-Kilovolts double circuit).
The project has been mired in controversy particularly over the choice of Synergy Holdings to build a long road to the Amaila site through forest and the lack of transparency.
A framework agreement for the Amaila Falls hydropower project was signed in Shanghai, China on July 15, with President Bharrat Jagdeo in attendance.
The agreement formalizes the cooperation between the Guyana Power and Light Incorporated, Sithe Global Amaila Holdings Limited, the China Development Bank, and the China Railway First Group Company Limited. “It sets out the parties’ intention to reach financial closure on the Amaila Falls project within 12 months or ideally sooner”, Minister of Finance, Dr. Ashni Singh told the National Assembly..
“The Amaila Falls project is the biggest infrastructure investment in our country’s history. From the start of it operations, it will provide value to Guyanese citizens and the wider economy through cheaper electricity, while simultaneously enabling Guyana to switch from nearly 100% dependence on fossil fuel sources for electricity generation to nearly 100% clean, renewable energy sources”, the Minister said.
He pointed out that 20 years after it begins operation, the hydro-plant will be transferred to the people of Guyana at zero additional cost, thereby “bequeathing long-term independence, national competitiveness and environmental sustainability to our children and future generations”. Singh said that the project will involve utilizing less than 0.001% of the State Forest area. “The government is firmly committed to ensuring that the project complies with both national and international social and environmental safeguards”, said the Minister. (Mark McGowan)
