Following rounds of discussion among various stakeholders, including project developer Sithe Global and the Opposition, Prime Minister Sam Hinds is hopeful that the US$858.2 million Amaila Hydro Power project gets the necessary approval and goes ahead, locking in financing within the present price window which closes December 31.
Hinds, speaking to Stabroek News yesterday said, “We hope to bring it back and make it happen someday. We are hoping that some understanding will be reached within the next week.”
“The Bill and motion will have to come back (to Parliament) and for this we may have to suspend the Standing Orders,” Hinds said. The bill pertains to a reserve area for the hydro project and the motion to the loans guarantee ceiling for borrowing by public corporations. The opposition nixed both at a recent session of Parliament.
“We would like everyone to be persuaded that this is good for Guyana. I have a feeling that in a spirit of accord [the issue] will be finalized and facilitated by some give and take,” he said.
Leader of the Alliance for Change Khemraj Ramjattan said his party is leaning towards supporting the two legislative instruments as clarity sought on the controversial Amaila Falls hydro project has been provided by officials of Sithe Global and the Blackstone Group.
Since the AFC holds the balance of power in the National Assembly, support for the Bill and motion would mean the Government will see the passage of legislation critical to the due diligence process even if it fails to gain the support of APNU. Government went on the offensive when the Opposition defeated the Bill and motion nearly two weeks ago leading to the President using strong words to describe the actions of the Opposition.
Speaking with Stabroek News yesterday, Ramjattan said that while the party is still hedging its support for the overall Amaila project on what the Inter-American Development Bank (IDB) says in its due diligence, it is prepared in the short term to support the Hydro Power Amendment Bill 2013 and the motion seeking to increase the loans guarantee ceiling. However, he said that for the motion to gain the support of the party, Government must convince the party that the level to which that ceiling is being raised is necessary for the Amaila project and that it would not be applied to any other entity, like NICIL for example.
“We are in support of the Bill now since our experts have gone through it,” said Ramjattan. Asked whether this was a change in the AFC’s position on waiting on the IDB due diligence before supporting the project, Ramjattan said, “It is not a change in position.
We are taking a cautious approach. We feel that the questions answered gave us a clear indication of what we want to do with the motion. It is clear that Sithe and Blackstone want a guarantee to assure that they will be paid for the electricity produced by Amaila,” he said.
“Having studied the hydro Bill, it is a Bill that we could approve of,” he said. However, he said that with regard to the motion to raise the loan guarantees ceiling, the party wants it lowered and will be proposing amendments to it. He expressed the hope that the Government would yield to the amendments if they want the motion passed.
He said that the party had a chance on Wednesday to ask questions of the prospective developers of the project, Sithe Global and the Blackstone Group and many of the outstanding issues were clarified there. He said that there is a chance that the AFC will call for an independent assessment of the project from a respected international agency.
Ramjattan made the point that the IDB due diligence in itself does not mean that the IDB will approve of the US$100 million in loan financing for the project. He said too that if the IDB does not approve of this sum, then the project is “dead” since the party would not support Government or Sithe seeking this money from another source.
During a stakeholder consultation held on Wednesday at the Guyana International Conference Centre, Brian Kubeck, Sithe’s Chief Commercial Officer stated that some 23 megawatts of power will be lost along the way in the transmission from the hydro station to the GPL Sophia Substation.
Asked yesterday whether this had been a consideration and how it would affect the project’s targets, Executive Director of the National Industrial and Commercial Investments Limited and Chairman of GPL Winston Brassington said that he will get back to the newspaper with an email response.
Hinds when asked about this level of losses before the power reaches the grid said that while he was not at Wednesday’s forum, he doubts it would be that high. “One would expect losses in the order of two to five percent.
What is lost along the way is not metered by GPL and thus will not be a part of our payment [for the electricity],” Hinds said.
Meanwhile, public commentator and former head of the Guyana Electricity Corporation, Ramon Gaskin in a letter to the Editor posed a number of questions about the venture ranging from who owns the licence to the preparedness of the Guyana Power and Light to manage the power generated.
Officials from Sithe on Wednesday told Opposition MPs that if the Bill and motion are not passed by August 12 and there is no national consensus, then they will pull out of the arrangement. They also called for a commitment to finish the road by the end of the year upon which their continued involvement in the project is contingent. Minister of Works Robeson Benn is on public record as saying that the road may not be completed by the end of the year.
“Where is the evidence that the GPL is in a position to handle this project? What are the projected system losses for GPL in 5, 10, 15 and 20 years?” he asked. He also asked who will be setting the tariff when Amaila becomes a reality.
“Who owns the licence? And how much was paid to Fip Motilall for it?” he asked.
He also wanted to know what the licence covered exactly and what the expiry date was on it. He asked whether all of the terms of the licence had been complied with and whether Sithe’s equity contribution to the venture comprised cash or services already rendered.
He questioned whether Sithe was borrowing money from the Inter-American Development Bank and if so how much and on what terms.“Is Sithe or the IDB seeking a Government of Guyana guarantee for this loan? Is this provoking an increase in the debt ceiling? Are Sithe and IDB aware of the legal limitations on the Government guarantee for borrowing?” Gaskin asked. “Who picks up the costs for the failure of this project,” he wanted to know.
He queried whether Sithe is willing to produce its calculations and projections showing a reduction in tariffs. “What is the total in US dollars that GPL would have to pay over 20 years on the PPA?
What exchange rate on the US dollar is projected in year 5, 10, 15 and 20?” he asked. “What is the guaranteed rate of return for Sithe over 20 years?” he asked.
