Dear Editor,
Amaila Falls Hydro Inc (AFH) takes this opportunity to offer the following update regarding the Amaila Hydropower Project (Project). We appreciate the continued public interest as we maintain transparent lines of communication regarding the project.
During our meetings in Guyana earlier this year, Sithe Global officials offered a detailed look into the project costs, timelines and issues leading up to the financial closure of the project.
At the time, we were anticipating an approval by lenders to enable a financial closure by this summer. While that timing has slipped, our lenders remain supportive of the project.
We have worked closely with the Inter-American Development Bank (IDB) to address its concern about Guyana Power and Light’s (GPL) technical and financial capacity. Based on our discussions with IDB, we are hopeful that the project will be cleared to start final due diligence and documentation in July.
The project’s financial closure should occur 6-8 months thereafter. This delay is a disappointment to us, but we recognize that transformational projects of this nature require careful advance planning to ensure successful implementation.
One risk of delay is that the project’s construction contract price could increase. Such increases could result from changes in foreign currency exchange rates or other factors. While previous currency adjustments resulted in substantial cost increases, the US dollar to Chinese yuan renminbi foreign exchange rates have not moved significantly in the first half of 2012.
However, it is impossible to predict future changes in currency rates or other factors, meaning that the risk of price increases remains a serious concern until we achieve financial closing.
We continue to work diligently to maintain the current construction pricing structure and maintain the viability of the project amidst the delays in securing the project debt from our lenders.
The project remains fundamentally strong because it is the lowest cost option for GPL and its ratepayers.
It continues to represent the best low-cost, long-term option to reduce GPL’s average generation costs and dependency on imported fossil fuels. Furthermore, it entails a significant improvement of the electricity infrastructure in Guyana that will support Guyana’s overall economic growth and sustainable development, based on a clean, reliable and affordable electricity supply for its industries, businesses and residents. Sithe Global looks forward to partnering with the people of Guyana on this exciting project.
Yours faithfully,
Brian Kubeck
Bruce Wrobel
