The stage is set for the next phase of lender due diligence and documentation needed to reach project financial closure and begin construction of the Amaila Falls Hydroelectric facility, scheduled for the second quarter of 2013, now that the contract for the engineering, procurement and construction (EPC) has been signed.
According to a press release from Sithe Global Inc and the Amaila Falls Hydro Inc, the due diligence and documentation phase is expected to conclude in nine months, which is within the window of price certainty pursuant to the EPC Contract. “AFH expects financial closure in the second quarter of 2013, with construction beginning immediately thereafter,” it said.
It noted that the access road project is to be completed prior to commencing construction of the project. “The project is scheduled to provide renewable energy 3½ years later,” the release said.
“The project represents the best low-cost, long-term option to reduce GPL’s average generation costs and dependency on imported fossil fuels. Sithe Global believes that the final project tariff will provide substantial annual savings to GPL and the public. The project will provide a significant improvement in the electricity infrastructure in Guyana that will support the country’s overall economic growth and sustainable development, based on a reliable, affordable electrical grid for its industries, businesses and residents,” the release said.
The IDB had expressed reservations about the capacity of the Guyana Power and Light to manage the project and had been concerned about the high rate of loss still in the electricity system.
Minister of Finance Dr Ashni Singh, Chairman of GPL Winston Brassington, and officials of China Railway First Group and of Sithe Global signed the agreement in Xian, China on September 11.
The EPC contract is valued at US$506 million, representing the largest infrastructure contract ever executed for Guyana.
“Signing the EPC contract provides price certainty, avoiding the risk of commodity price adjustments for a period of nine months during which AFH will secure the project financing,” the release said. It added that the pricing is subject to adjustment in currency fluctuation until financial closure is reached, at which time the pricing will be fixed.
The release said Sithe Global will lead the oversight of the construction activity, using its core management team “which has successfully led the development or acquisition of over 70 power plants comprising more than 18,000 megawatts globally.
“China Railway, one of the world’s largest infrastructure construction companies with significant experience building hydropower plants, will build the power facility and transmission lines. The robust contractual requirements of the EPC Contract require that the strength, structure and integrity of the dam and associated power plant infrastructure will be of accepted international standards.”
It said that Sithe Global will closely monitor the implementation and ensure strict compliance with the standards and that third party oversight will be conducted by the lender’s engineer, the owner’s engineer, as well as an independent panel of experts in dams and dam safety.
