Dear Editor,
So it seems that the construction of Amaila Falls Hydro will not start in January 2014 as planned, and it will not be generating electricity for the people of Guyana in 2017. I hope I am wrong, and that media reports that President Ramotar is fighting to save the project are accurate. If so, I hope that the President is successful in his fight. However, it seems that APNU have made their final position clear, and that this will sound the death knell for this project, since Blackstone needed total political consensus.
Supporters and detractors of the project have all identified four people as the driving force behind the collapse of the Amaila Falls project ‒ Christopher Ram, Ramon Gaskin, Anand Goolsarran and Clive Thomas. Some see them as bitter and uninformed opponents of progress; others see them as courageous champions of the truth. But all see them as the ones who provided the analysis that killed the project.
Given that generations of Guyanese will either suffer from their destruction, or benefit from their analysis, I respectfully request them to answer 4 clear questions for me:
1. Under their analysis, what is the total public debt that would have been incurred by Guyana for Amaila Falls?
2. Under their analysis, what would Amaila, once operational, have saved the taxpayer every year through the removal of the annual subsidy to GPL?
3. Under their analysis, what is their projection for the consumer tariff that would have been paid after Amaila became operational?
4. What would have been the annual national savings as a result of the reduc-ed dependency on fossil fuel to operate GPL generators?
In providing me with the answers, could they please reference the following statements, all of which have been used to justify the collapse of the Amaila Falls project?
Public debt
1. Mr Ram said: “We are not sure who the borrower is”; then, “Guyana will have to pay back US$2.2 billion.”
2. Mr Gaskin said: “Guyana will have to pay back US$2.4 billion,” and “The Government of Guyana is guaranteeing 82% of US$840 million.”
3. Mr Goolsarran said: “The government will be responsible for financing US$688 million.”
4. Dr Thomas said: “[Amaila Falls] instantly raises Guyana’s contingent external liability by US$750 million, or about 30% of GDP.”
5. The Government of Guyana said: “It is very important to emphasise that no more money will be paid by the taxpayer for Amaila Falls, and that no government borrowing is taking place…To emphasise and repeat: approximately US$100 million is the total bill to the taxpayer, not… US$2.3 billion, or any of the other figures that have recently been quoted. The exact figure will be finalised at financial close, but it will not change significantly.”
Only one of these five statements can be true. Which one?
Taxpayer subsidy for GPL
In my research, I did not find any reference where any of the aforementioned gentlemen ever referred to the issue of how Amaila Falls would save the nation hundreds of millions of dollars because of the removal of the need for a subsidy from the taxpayer to GPL or any reference to the saving which would have resulted from the reduced dependency on fossil fuel.
However, the government said: “The total savings to the taxpayer because of the removal of GPL’s subsidy will be at least US$30 million per year, or US$600 million over twenty years – far in excess of the US$100 million provided by the taxpayer in equity.”
Why did the four gentlemen never acknowledge these savings? Is the government’s statement wrong?
Consumer tariff
1. Mr Ram said: “Based on my calculations, the tariff will be increased by 23.6%.”
2. Mr Gaskin said: “This project will not lead to a reduction in tariffs, and in all probability rates will have to go up.”
3. Dr Thomas said: “Independent analysts predict a higher price than presently prevails.”
4. The government said: “Amaila will address the biggest input cost [to the consumer tariff] by far ‒ GPL’s cost of electricity generation. With Amaila, GPL’s cost of electricity generation will come down in stages – by 40% in the first twelve years; by 71% for the eight years after that, and by 90% for the eighty years after that, based on current fuel price projections… [Therefore], the total consumer tariff will decrease significantly because of Amaila Falls…
“The reduction in consumer tariffs will be at least 20% in 2017, and considerably more in years ahead.”
Only one of these four statements can be true. Which one?
Focusing on Amaila, and Amaila alone
I hope that in providing me with answers, the four gentlemen will focus on the Amaila Falls project, and not on the separate project to modernise GPL, which was due to advance in 2014. Both projects are needed, but Amaila Falls would have the biggest impact by far – which I assume is the reason it was prioritised. The government said that even if GPL was not modernised, Amaila would see a reduction in consumer tariffs of 20% by 2017 (as well as the removal of subsidy); this would be even more with the modernisation of GPL.
The price tag for Amaila Falls
The government has clearly stated that its statements are based on a US$858 million price tag for the Amaila project (including plant, transmission line and access road), while recognising that currency fluctuations might make that price go up or down slightly before financial close – which was to have been in October/November 2013.
The government states that approximately US$100 million of that US$858 million is being invested by Guyana – with the rest being sourced in the global capital markets. Of Guyana’s investment, they say that US$15 million is already spent, and that the bulk of US$80 million is sitting in the Guyana REDD+ Investment Fund (GRIF) waiting to be transferred.
Therefore, by simple maths, my analysis is that the outstanding Amaila bill to Guyana is US$5 million, whereas savings from the removal of subsidy alone will be six times that in the first year of operation.
If the four gentlemen still do not accept this price tag and its constitution – ie an overall price of US$858 million, with US$100 million from Guyana and US$758 million from global capital markets ‒ could they please explain clearly why this is so? This is particularly important – because all parties to the transaction publicly stated that the price has settled, apart from minor positive or negative currency fluctuations in the next couple of months.
I do not doubt that the four gentlemen are all of strong intellect, so I hope that if they conclude that they may have been mistaken in some of their comments, they will also acknowledge this.
Given that history will rightly record these gentlemen as the ones who killed Guyana’s best chance of hydro-electric power in fifty years, I also respectfully request that they will be clear and concise in their communications with me and the Guyanese public when they provide their answers.
Yours faithfully,
Gerry Gouveia
CEO
Roraima Airways
