Discussions are ongoing with a prospective new developer for the Amaila Falls Hydropower Project (AFHP).
President Donald Ramotar said earlier this month that another company has been identified to replace Blackstone/Sithe Global as the developer for the AFHP. Speaking at the commissioning of a US$35 million power plant at Vreed-en-Hoop, West Coast Demerara on February 9, Ramotar had said that government is working towards beginning the construction of the actual project before the end of this year.
He did not say who the new developers were. It is also unclear what due diligence they were subjected to.
Officials are tightlipped on the identity of the prospective new investor and a source would only confirm that discussions are ongoing.
According to the source, any premature announcement of the identity of the prospective investor will prejudice ongoing discussions.
Before US-based Sithe Global pulled out from here in August 2013 as the developer of the US$858.2 million, 165-megawatt hydro venture, the AFHP was shrouded in controversy as costs escalated.
Since the project was first announced, costs for the 165-megawatt hydro venture have escalated from the original US$450 million to US$858.2 million up to 2013. Recently, it was also revealed that the costs for the access road had ballooned from US$15 million when the contract was signed in 2010. According to the Government Information Agency, a total of US$28.9 million was spent on the road up to December 2014, since the project’s inception in 2010. It now has an overall cost of US$43.5 million.
In his New Year’s address, President Donald Ramotar said that “within months” the government expects to achieve financial closure and the start of construction of the controversial AFHP. Norway has transferred US$80 million to the Inter-American Development Bank (IDB) as Guyana’s equity in the project. Subsequently, Ramotar said that a new investor has been identified.
Sithe Global pulled out of the AFHP in August 2013 citing a lack of political consensus. The company had issued explicit statements that unless all three parties in Parliament backed two measures for the controversial US$858 million project it would pull out.
The measures were not fully supported and the company walked away.
The IDB had been expected to partially fund the AFHP and at the time of Sithe Global’s pullout, the Bank was conducting due diligence but that was halted before it was completed due to the pullout.
The due diligence was being done to determine whether the IDB would participate in the financing of the project.
Now, based on documents seen by Stabroek News, both the IDB and the Norwegian Agency for Development Cooperation (NORAD) “estimate in good faith” that the IDB Board will approve a loan for the project by June next year.
With general elections set for May, observers note that both investors and financiers will adopt a wait-and-see attitude.
