Dear Editor,
I refer to a letter by Brian Kubeck and Bruce Wrobel of Sithe Global in SN dated June 17 on the proposed Amaila Hydropower Plant, indicating that the final closure price for the Amaila Hydro project will be known later and financial closure is expected within 6 to 8 months time (‘Hopeful that Amaila Falls Hydro project will start final due diligence, documentation in July’).
The closure cost has already escalated from US$500M to US$835M and now it appears this will escalate higher. According to my calculations, if the installed capacity of the plant is 165 megawatts (MW) the construction cost of the plant would be US$5,060 per kilowatt installed. However, if the installed capacity is only 145 MW then the unit cost will be US$5,750. Both of these prices are far higher than the feasible cost of a hydroplant in a developing country, which should not be more than US$4,500 per kilowatt. It is not clear what the final output of this plant will be and this will definitely impact the price of electricity delivered.
The above costs do not include any allowance for cost escalation due to design changes because of problems in geology encountered during construction. This could increase the closure cost appreciably.
The government should publish the details of the Purchase Power Agreement it will commit Guyana to, as this will really determine what the Guyanese public will pay for the supply of electricity.
In the meantime, the government is spending vast sums constructing the access roadway that is expected to be optimistically completed in a few months time (over the rainy season). A delay in starting construction of the hydroplant would mean the government has to continue spending money to maintain the completed part of the roadway until the Chinese contractor starts construction, perhaps some time next year.
Yours faithfully,
M Alli
