The final cost of constructing the Amaila hydropower plant will be known by next month, Sithe Global’s Senior Vice President Jim McGowan says.
“Some time in July, we think we will be able to provide the final cost of the project,” McGowan told Stabroek News on Friday. “We are in the final stage of negotiations, and when I say final, I mean final,” he said. He said that a team from Sithe Global, the developer for the project, has had a team in China for about a month now negotiating the details of the contract with China Railway, the firm constructing the hydropower plant. Issues pertaining to the terms and conditions of the contract are among those being discussed, McGowan disclosed. A team from China Railway was in Guyana earlier this year to visit the site proposed for the hydropower plant.
McGowan explained that once the final cost of the project is known, his company will be in a better position to secure financial closure for it. “We are working very hard to get this thing to financial closure as soon as possible,” he said. Sithe has projected a project cost of between US$ US$650 million to US$700 million and construction is expected to start before the end of the year.
However, the road, which is being constructed by Synergy Holdings, is still way behind schedule. The completion of this road is seen as key to securing financial closure for the project before the end of the third quarter.
The project has picked up key financial support from the Inter-America Development Bank (IDB), which has proposed support of up to US$200 million. The IDB has said that the project is consistent with its 2008-2012 country strategy for Guyana which includes support for the government’s efforts in finding alternatives to oil-generated energy. McGowan said that Sithe Global is currently working on meeting all the social and environmental requirements of the IDB. The Environmental and Social Impact Assessment (ESIA) for the Amaila Falls is currently on the IDB’s website in order to facilitate public comment. McGowan said that in a matter of weeks, the document will be updated to reflect the consultations held recently in Guyana.
Apart from support from the IDB, Sithe Global is expected to contribute 30 per cent of the project cost as equity while the remaining cost will be borne by the China Development Bank (CDB) and the Government of Guyana.
Government has already contributed US$15.4 million to build the access road, which President Bharrat Jagdeo said is Guyana’s equity in the AFHEP. McGowan explained that the government is considering pouring more equity into the project but did not elaborate on this.
All the debt financing will be loans to the project which will be repaid by the Amaila Falls Hydro Inc, McGowan explained. Amaila Falls Hydro Inc is a wholly owned affiliate of Sithe Global. McGowan explained the loans would be paid back during the 20 years after construction prior to the plant being handed over to the government.
The Amaila Falls hydropower is a 165MW facility proposed to be constructed immediately upstream from the confluence of the Amaila and Kuribrong rivers. The Guyana Power and Light (GPL) is supposed to purchase the project’s entire output of approximately 143 MW of delivered capacity under a 20-year Power Purchase Agreement.
