Dear Editor,
When the PPP/Civic came to power in October 1992, one of its priorities was to prepare a plan for national development, sometimes referred to as ‘The Strategy for National Development.’ The then President, Dr Jagan, always understood the importance of energy sufficiency and in 1992 was still keen on developing the Tiger Hill site on the Demerara River. He quickly understood, however, that the Tiger Hill site, a low head scheme with no scope for expansion and a large reservoir, will not easily attract funding because of significant flooding and environmental impact.
Subsequently, utilising various criteria, a comprehensive comparison of seven short-listed prospective sites was conducted and the medium size Amaila site was recommended to the government for development. It is common knowledge among engineers and enlightened political leaders that optimization studies have shown that it is both practical and economically feasible to develop a nation’s hydropower resources by focusing on a ‘cascade development,’ ie, to focus on one basin at a time and to commence construction on the uppermost station (the tailwaters of the upper plant become the headwaters of the lower plant and it is easier to build a second and third plant etc, utilizing existing facilities ‒ access roads, transmission lines, substations). With this concept in mind, engineers selected and recommended the Potaro River Basin commencing with the Amaila Falls project to the Government of Guyana.
Some attractive features of the Amaila Falls site are as follows:
1. The Amaila Falls is a high head scheme whose power potential is more head related than discharge related, which necessitates a relatively small reservoir with lesser impact on the environment.
2. The installed capacity of the Amaila Falls scheme can be increased to as much as 1,000 megawatts:
(a) It is possible to build a dam at Chi-Chi on the Upper Mazaruni (a dam that will not affect the Upper Mazaruni development) and divert its flow into the Amaila reservoir. Such a diversion will increase the capacity of Amaila by 215 av MW.
(b) It is also possible to build a dam upstream of the Kaieteur Falls and divert some of the waters of the Potaro into the Amaila reservoir. Such a diversion can increase the capacity of the Amaila by as much as 400 av MW. Of course, Kaieteur is a national park and it is important to preserve this heritage site. With proper design and regulation of flow, I am sure that the majesty of the Kaieteur Falls can be preserved. I am certain, however, that there will be tremendous opposition from nationalists and environmentalists for this diversion from the Potaro into the Amaila reservoir on the Kuribrong River. But it is worthy to note that a similar diversion was done at Niagara Falls without significantly affecting the beauty of the falls. And if all of this is too much for the public to support at this time, then just consider the Chi-Chi diversion only which can raise the installed capacity of Amaila to 400-450 MW depending on the role of the plant in the thermal-hydro integrated system.
It gets even better. In 1982, through a loan/grant from the World Bank, MONENCO (Montreal Engineering Co) completed a comprehensive feasibility study for a plant (approximately 100 (?) MW installed capacity) at Tumatumari downstream from Amaila. Tender documents for civil works, electromechanical equipment, transmission lines and substations were also prepared (available at GEA). It will be relatively inexpensive to upgrade these studies and the Tumatumari can easily come on stream within three to four years as the logical second plant to the Amaila Falls to satisfy any additional/growing load demand. Incidentally, this plant was never constructed simply because the then President dismissed it for being too small, too insignificant.
This letter is not intended to distract anyone from his or her genuine concerns about the US$850M, 165 MW Amaila plant to be developed by Sithe/Blackstone. It simply serves to enlighten citizens on how unique and dynamic the Amaila Falls site is and why it was selected in the first place. This simple site, until recently unknown to most people, together with the Tumatumari, if planned and designed with all or some of the considerations outlined above has the capacity to meet Guyana’s energy needs (excluding smelting) for the next 50 to 75 years.
So what’s next? Each site is unique and the initial capital investment is always large, especially in the case of a first plant that does not benefit from existing facilities such as access roads, transmission lines and substations. In the past, many Third World countries were able to develop their hydropower resources through concessionary financing (low cost of capital/interest, long payback period and moratorium on payments) from the multilateral funding agencies like the World Bank and the IDB.
However, in the case of the proposed Amaila Falls project, the unit cost per installed kilowatt capacity (cost/kw) of US$5,000 is frighteningly high even with access road and transmission lines taken into consideration. If HARZA Engineering company, a reputable company that prepared both the technical and economic studies of the 10,200 MW Guri Dam in Venezuela, has completed the feasibility study of the proposed Amaila project, then a very detailed and comprehensive document should be available for perusal and review. At this time, the IDB must be allowed time to complete an impartial due diligence on the proposed project. It is absolutely necessary to examine the economic feasibility of the project for the duration of its useful life.
Taking the current capital investment and the cost of capital from various sources into consideration, the annualized cost, the annualized benefits, unit energy cost (cost per Kwh) at the point of delivery (presumably Linden) and the unit cost of energy to various categories of consumers must be accurately defined. With such a high capital investment and possibly high cost of capital, the IDB may, unfortunately, find this project ‘not feasible.’ In such a scenario, the government and people would need to regroup and part ways with Sithe/Blackstone, the Chinese contractor and the Chinese loan and explore other ways forward.
There is huge potential in the Amaila Falls site. To walk away at this time is taking 1000 steps backwards. Instead the government and people of Guyana may wish to consider the following:
1. Re-evaluate and modify the current project to allow for future expansion of capacity, utilizing the expertise of tested power producers such Electrobras (Brazil) or RusHydro (Russia).
2. Prepare individual tender documents for civil works, electromechanical equipment and substations to be tendered separately.
3. Create a special hydropower authority staffed with trained and competent Guyanese engineers to promote hydropower development. The current GEA and the Amaila Falls technical team are, unfortunately, poorly staffed and trained to guide the nation on such huge investments.
4. Seek concessionary financing from multilateral funding agencies and develop projects as national projects to be operated and managed by experienced energy producers.
5. Be wary of alchemists and snake oil peddlers who with a sweet tongue will peddle their wares in order to rob the country of millions. Seek the advice of the hundreds of patriotic Guyanese who have spent their entire professional lives traversing the rainforests of Guyana monitoring the numerous streams, surveying the various sites and preparing volumes of reports that are the custody of the GEA. Some honourable names come to mind: Sam Ramsahoye, Maurice Veecock, Mannie Singh.
Finally, people should not worry. Just look on the bright side. I have looked through the crystal ball and good things are in store:
1. Soon a deep sea port at Morashi on the right bank of the Essequibo River (looking downstream) will be built, and a brand new city will mushroom and be connected to the large cities of South America by rail and roads.
2. Soon large reserves of oil (more than anyone can imagine) will be discovered in the Corentyne and Takatu Basins.
3. Guyana would strengthen its bonds with its southern neighbour (Brazil) through a joint venture to finally develop the Upper Mazaruni scheme based on a workable agreement similar to the one used to develop the Itaipu between Brazil and Paraguay.
4. Guyana will muster the political will to prepare a new constitution which will create a new structure of government that will be more suitable for our polarized and divided country. The reduction in the powers of the presidency and the division of power will lead to a more inclusive, stable and just government.
Yours faithfully,
(Name and address provided)
