President Ramotar’s use of language such as terrorism and blackmail to describe the defeat of two matters on Thursday in the opposition-controlled legislature pertaining to the Amaila Falls Hydropower Project obscures a very important point. His party controls the executive. By virtue of the Westminster-hybrid constitution it has been elected to hold the presidency and form the government albeit with the legislature being controlled by the minority.
The onus is therefore on the government to fashion a mechanism through which it can function and have its essential legislative agenda passed. This is the covenant that it has with the people. It must find a way for the business of the country to go forward. If the Amaila Falls project is so crucial to the future of the country as per the accounts given of it by a bevy of government officials then there should be nothing that prevents it from going ahead. Had the government had a majority in Parliament it would have boasted that it had the fiat of the legislature for securing the single largest project in the history of the country. By that very token it has to navigate an opposition-controlled legislature. The bridge between a government controlled House and an opposition controlled one cannot be labelled as terroristic or blackmail. To do so would be to undermine the vitality of the distinct branches of the government. It was the government’s obligation to negotiate a deal with the opposition parties represented in Parliament.
What the government clearly failed to do was to satisfy the public and the opposition that passage of both of these matters was crucial to the IDB’s due diligence for the project and that the project itself was sound in design and would live up to the expectations that had been ascribed to it.
Had the government been able to agree with the opposition that the project be evaluated by a committee of experts knowledgeable in hydroelectric ventures and the full gamut of ramifications for the economy and power supply, both sides of the House might have felt comfortable about making a decision in its favour. As it is, the opposition is relying on a limited pool of resources to evaluate this project and had signalled that if a credible multilateral financial institution like the IDB was prepared to give its blessing to the project and be part of a syndicated loan then that was a firmer basis on which to proceed. That was a perfectly understandable approach by the opposition.
On the other hand, the government seems completely at ease with proceeding with this project absent the slightest discomfort about many things that have already gone wrong and others that raise red flags. Some of these include the astonishing assigning of the contract for the Amaila Falls access road to Mr Fip Motilall, the disastrous decisions in relation to the road which is now way past its deadline and far, far over budget, the assigning of the rights to the project by Mr Motilall to Sithe at a price, the questions surrounding Sithe’s track record in other projects and the abilities and terms of the contractor for the project, China Railway.
It would be exceptionally reckless of the opposition to give approval to the single largest investment in the country’s history, which comes with towering financing costs and steep rates of return to meet, without being fully informed and having all of the requisite information in its possession. There are innumerable pitfalls and tombstones of failures by this government in similar projects. They include the huge money sinkhole that is the power company, GPL. How much more money will be sunk by consumers, the government, the IDB and others to get things right at GPL? After years of failed strategies including a disastrous attempt at privatization, the corporation is now running helter-skelter to perfect its transmission and distribution system, an omission which has resulted in colossal losses over the years and one that should have been addressed as long as 20 years ago. How does one repose confidence in a government and corporation that invested for many years in power generation knowing that 15% or more would be lost from the outset and without doing anything substantial and sustained about this? Would they be able to assure the public that when a power purchase agreement was signed with the Amaila project that GPL would be able to efficiently and cost-effectively distribute power? Commercial losses remain an intractable problem on which there has been no sustained improvement.
What about the scale of financing costs and the rate of return that is to be demanded by Sithe? Are those affordable and reasonable? Surely the government should adequately convince the public and the opposition that these costs and returns on investment have been thoroughly scrutinized by market experts.
Most important is the concern raised by APNU’s Mr Greenidge, the former finance minister, that in discussions with the IDB the opposition was unable to elicit an assurance that the cost of power to the consumer would be lower whether in the short to medium term. Surely that should have been the lynchpin for this project otherwise it would be akin to digging a huge hole just to fill another. Can the Finance Minister, Dr Singh address the public on what the rates for all classes of consumers per annum would be for the first 10 years of the project’s life and what assurances there would be that the government doesn’t end up subsidizing tariffs or foregoing dividends in favour of the demands of private capital?
Always in the backdrop of these discussions is the monumental failure that the Skeldon modernization plan and the Chinese- built factory have been. With huge sunk costs and steep annual losses accruing as a result of high operating expenses and the dismal output, it is hardly a recommendation for the government. As a matter of fact, the Ramotar administration should ensure that any official who was remotely involved in its execution be exiled from any discussions on major schemes until there is a magnificent recovery in its fortunes. Not to be forgotten is that the public-private model for the Berbice Bridge has saddled the people of Region Six with a high cost for crossing to enable the guaranteed rate of return to private investors.
A vote in favour of any aspect of the Amaila project cannot be taken lightly by either the government or the opposition. When the government wants the green light for anything to with Amaila, it has to produce to the nth degree all of the assurances and studies and in good time for the legislators to make informed decisions. This is what the private sector and other organisations should be ensuring is done. A failure of the Amaila project will not only scar the environment, it will pose an incalculable risk to the economy and the country’s standing in the investor community.
After the cold, harsh reality of Thursday’s vote one hopes that President Ramotar and his Cabinet can retreat from the extravagant language and knuckle down to convincing the public and the opposition that this project can work and deserves national support under its auspices.