The Inter-American Deve-lopment Bank (IDB) has approved funding for studies required to prepare a road link to Brazil and a deep-water port project that could eventually be financed through a public/private partnership.
The US$1.5 million technical cooperation (TC) will cover the necessary market, engineering, environmental, social and financial studies required to prepare the road link and deep-water port project for eventual financing through a public/private partnership, according to the IDB.
The paving of the Linden to Lethem road has long been talked about but has been slow off the mark. At the commissioning of the Takutu Bridge in September 2010, then Brazilian President Luiz Inacio Lula da Silva had pledged his country’s commitment towards advancing and expanding its bilateral agenda with the country, with an immediate focus on Guyana’s hydro-power project and the paving of the Linden-Lethem road.
Additionally, Guyana and Brazil last December signed a Memorandum of Understanding to establish a working group on infrastructure, which was supposed to consider the Linden-Lethem Road, a port and hydro-electric projects. It is believed that a deep-water port and fully paved Linden-Lethem road would enable the robust movement of Brazilian goods from Roraima and Amazonas states through Guyana cutting down the much longer delivery time via Brazilian Atlantic Ocean ports.
Previously, several studies for the upgrading of the Linden-Lethem road were done including a feasibility study last year by the Canadian firm, SNC-Lavalin, which is incomplete.
The IDB says that the Technical Cooperation, which was approved by the Board last month, will primarily support the preparation of studies required for the establishment of a land transport link on the Brazil-Guyana border at Lethem, and the construction of a deep water port along Guyana’s coast. The studies to be undertaken include market, engineering, environmental, social and financial studies.
Component One, the market study, will determine the size and value of the shipping markets in the Brazilian states of Amazonas, Para and Roraima so as to ascertain the degree of trade that could be diverted to a port in Guyana, as well as new commodities that could be traded between these Brazilian states and Guy-ana. The demand for land transportation between Guyana and northern Brazil will also be examined, given the scenario that a suitable port(s) is available on the coast of Guyana which could accommodate the shipping needs associated with the expected demand.
The study would also assess the current and future (growth) transportation and market demand in the Amazonas/Roraima states of Brazil and also current options and cost available, considering the ports in Brazil, Venezuela and Guyana. A key element of the market study would be consultation with the shipping stakeholders in Brazil, Venezuela and Guyana to ascertain the relationships they have with shipping lines and also to better understand the dynamics of the industry, the TC document says.
The market study would estimate the traffic for various scenarios (low, medium, high) which could be diverted from the current ports to Georgetown and the revenue that could be had on the land transport leg by way of tolls, while still remaining competitive. The study will also examine the local traffic demand and quantify the tolls which could be generated. The overall revenue estimation would include both Brazilian generated and local traffic. The outputs of this market study will be inputs for the Terms of References for the Engineering, Economic and Financial studies, the IDB says.
It says that in order to satisfy the various demand scenarios derived under the Market Study, various land transport modality and alignment options available for the different choices of port sites in Guyana would be examined under Component Two, Engineering Studies. The analysis of alternatives will take into account established and new road alignments, port sites with natural water depths, traffic and cargo volumes, staged development, physical, environmental and social restrictions, and public consultations.
The analysis will include definition of suitable land transport modalities; identification of alternative port sites and corresponding land transport alignments; defining homogenous segments within each alternative alignment; conceptual works designs for each port site and land transport alignment alternative; assessment of the technical, social, environmental and economic viability of the different segments and port sites in collaboration with the Environmental/Social and Financial/Economic Teams; and definition of the best alignment, the optimum land transport route and mode, and port site. Preliminary engineering designs and plans, technical specification, construction time table and costing would be produced for the land transport solutions and the port.
Under Component 3: Social and Environmental Studies, the scoping, consultation process with relevant stakeholders, field activities and preparation of a Strategic Environmental and Social Study (SESA), Country Environmental Assessment (CEA) and Environmental and Social Impact Assessment (ESIA) for the engineering options, will be done. The SESA and CEA would be conducted to complement data sourced from past and ongoing studies which will provide a base for analyzing the likely significant effects of the land transport link and port operation on the country’s environment, natural resources, indigenous people, general population and also for assessing its institutional capacity for handling these effects.
The TC document noted that the majority of the land transport link would be through rainforest and savannah lands which are part of a diverse ecosystem. In addition, these lands have varying uses and status, and comprise both state and indigenous lands, conservation area, forestry and mining concessions and to a lesser extent, farm lands. In the coastal area where the majority of the population resides and the possible location of the port would be, the land use is largely agricultural, residential, commercial and industrial. The ESIA would have to assess all of the identified land transport modalities and alignment options, and port site combinations.
The consultation process will inform and engage the general public and stakeholders from the initial phase of the study on the intention to implement the project, and further, to understand the expectations and concerns of the population regarding the scope of the project before the studies are complete. The ESIA will satisfy the requirements of the Guyana Environmental Protection Act and Regulations as well as IDB policies, according to the TC document.
The preparatory activities for the ESIA and Environmental and Social Management Plan would include the identification and mitigation of direct and indirect impacts associated with the execution of the works and when the road comes into use, would take into account compliance with local regulations and the provisions of the Bank’s safeguard policies.
Meanwhile, Component Four, the Economic and Financing studies, will fund the studies to ascertain the economic and financial feasibility of the project as well as provide financing options. The structuring of the financing for the project is of great importance in order to minimize the public sector financial burden while leveraging private sector contributions and proficiency, according to the IDB.
The TC document says that the studies will entail modelling/forecasting to determine the level of economic output and rate of return from the “connectivity” which the establishments of these links are expected to create amongst Brazil, Guyana, South America and the Caribbean regions. “The financing of the Project would be analyzed in detail to examine the incremental infrastructure development versus one-off development for the various combinations of land transport and port identified in Component 2. The structuring of the operation to attract the interest of investors is key for the next steps. This would involve the examination of various commonly used Public Private Partnerships methods for financing such as, concessions and toll arrangements, and Build Own Operate Transfer, and the recommendation of the most appropriate method,” the TC document says.
The total estimated cost of the technical cooperation is US$1.65 million of which up to the amount of US$1.5 million will be financed by the IDB’s Regional Infrastructure Integration Fund on an non-reimbursable basis; and US$150,000 by Guyana by means of an in-kind contribution.
Government has requested that the Bank executes the TC on its behalf citing its current limited internal capacity and also the workload of the Ministry of Public Works (MPW) which is currently executing four IDB funded loans and four TCs, along with other donor funded and GOG projects. Therefore, the IDB will supervise and will be administratively responsible for the consultants’ contracts. The MPW will be actively involved in the technical review and acceptance of all Terms of References for the studies and the products of the consultancies.
In addition, the TC caters for the hiring of individual consultants to provide technical advice and coordination during the implementation of the project.
The TC will be executed in 30 months and disbursed in 36 months. The Bank will hire consulting services (individuals and firms) in accordance with current policies and procedures for institutional procurement. At the end of the execution, the Bank will hire an independent consultant to conduct the final evaluation of the TC operation and to assess the quality and scope of the outputs and outcomes developed in relation to the objectives initially stated as well as lessons learned, sustainability, and to identify the challenges ahead.
The IDB says that the project being undertaken, once implemented would have an impact on both the TC beneficiary countries, Guyana and Brazil. As such, Brazil’s concurrence on the outputs and recommendations would be important for the implementation of the solutions emanating from this TC, it says.
The Bank said that to mitigate any risks of disagreements, all outputs of the TC shall be shared with the Brazilian authorities through the existing Guyana-Brazil Joint Commission on the Development of Infrastructure Projects which was formed to address infrastructure projects including the ones being studied by this TC. Any comments and suggestions from Brazil would be incorporated towards the finalization of the studies.
“It is expected that Brazil will be very interested in the results of the TC as the road connection between Brazil and Guyana has been much discussed by both countries and is one of the IIRSA anchor projects for the Guianese Shield Hub agreed to by both Brazil and Guyana,” the IDB says.
“In order to ensure the success of the TC, the demand for land and sea transport modes in Guyana for goods emanating from the Roraima, Para and the Amazonas’ regions in Brazil, must be determined with an accurate degree of certainty. To mitigate this risk of poor demand estimation, the studies would have to assess both the current shipping needs and the willingness to change from the current routes which will be facilitated through rigorous consultation and engagement with the relevant stakeholders in Brazil. To facilitate the consultations and ensure credibility, the sanctioning by both the Guyana and Brazil governments would be required. This will also be discussed at the Guyana-Brazil Joint Commission,” the Bank said.
