Dear Editor,
In order to justify a ‘level playing field’ for electricity costs, Lindeners were informed (SS April 15), by Mr Samuel Hinds, Prime Minister of the Republic of Guyana, that their power supply costs now heavily subsidized will have to be standardized with the rest of the country, since their continued sound growth and development without constraint is dependent on this necessary reform. He further stated that this would be the beginning of the government’s transformational objective to merge seamlessly the Linden grid with hydro-electricity which comes on stream in early 2016 from Amaila Falls (AFHEP), a somewhat tall order.
There are compelling reasons to believe that Prime Minister Hinds‘s statements are pipe dreams intended to mislead Lindeners, as higher electricity costs are a recipe for economic and development decline, and not growth. The access road to AFHEP, a pre-requisite to start construction of the hydro-electric project is now over a year behind schedule and partially at a standstill because of differences over construction costs to complete segments of it. In any case, the road is unlikely to be completed this year and become fully functional any time soon, despite the assurances given.
Great uncertainty surrounds financing of the AFHEP as its developer awaits financing of a gap in the package of some US$200 million, expected to come from the Inter-American Development Bank (IDB), the amount of which is unlikely to be forthcoming for several reasons.
Firstly, no feasibility study was done to determine the project’s economic and financial viability, which was one of the reasons why the World Bank did not participate in its funding, while the IDB still has the project under consideration. Secondly, Guyana has a sizeable external debt which has increased the country’s credit risk.
Therefore, this factor as well as its small population relative to is large borrowing needs and its capacity to service its debts, have raised complex funding and debt servicing issues, such as the management capability of Guyana Power and Light (GPL) to cut its transmission, distribution and theft losses, as well as its ability to collect and raise enough revenues to service AFHEP debt.
AFHEP cannot start until the access road is completed and debt financing obtained.
Engineers then have to prepare final detailed designs for the project’s dam, power plant, sub-stations, transmission lines, specifications, etc.
The contractor has to be given time for mobilization and construction start-up. Construction problems with resulting delays are sure to be encountered by a project to be constructed in a remote location, thereby impacting adversely on its final completion date.
The rate per kwh for electricity generated from hydro-power to be delivered to Linden and coastal areas is yet to be determined, and given the fact that AFHEP is still evolving, it is reasonable to conclude that when that cost is made available it will be higher than that which is now paid for electricity, although it is in any case improbable that hydro-power will be available to Lindeners in Yr 2016 or any time soon thereafter, as Prime Minister Hinds would want us to believe.
Yours faithfully,
Charles Sohan
