Dear Editor,
I have considered the large-scale long-term energy plans by the main political parties and I agree with Charles Sohan and other critics that the main hindrance is the magnitude of the financing, without which the plans will remain a dream. I would therefore like to outline a plan that appears to provide the financing and invite discussion.
The key features are that there are many stakeholders, that the financing is spread over time to whoever forks it out, and that there are advantages for all participants. Risk will be minimized by firm commitments.
The present plan begins in Trinidad & Tobago (T&T) and was conceptualized by the ENMAN Group. They saw clearly that the T&T oil and gas is non-renewable, ie, it will be exhausted one day even if more is discovered. But T&T has loads of infrastructure and capacity. So the Southern Caribbean Cable Company (SCCC) was formed to prospect for a project to send electric power via cable to Guyana and Suriname. They will get the business if the project comes to fruition. But what are the benefits to others?
What is in it for Caricom?
The power cable is not only to go south to Guyana, but also north to the other islands in the Caribbean. Gas will be used for power and while this is not a renewable energy source, it is an initial step towards cleaner power. Other steps towards renewable clean energy will become realized when Guyana and Suriname realize their hydroelectric or other energy potential, and the cable can then supply electricity north to the rest of the Caribbean when that happens.
Such development will satisfy much of the Caricom Energy Policy (CEP) to assure access to affordable, adequate, safe and clean energy products necessary for the development of member states and for the consolidation of the CSME (established by the Revised Treaty of Chaguaramas).
The Central American Electrical Interconnection System (SIEPAC (Sistema de Interconexión Eléctrica de los Países de América Central)) project is an initiative to create an integrated regional electricity market among six countries: Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua and Panama. The project aims to enhance the efficiency of the electricity sector in the region and to promote private-sector involvement in transmission infrastructure and generation capacity. Caricom will want to do likewise in the electrical energy trade and come of age in a global electrical network.
What is in it for T&T?
Trinidad Generation Unlimited (TGU) in 2013 opened a US$740M power plant that has the capacity to generate 720 MW of electricity at twice the efficiency of any power plant anywhere else in T&T. Unfortunately, up to now the transmitter and distributor, the Trinidad and Tobago Electricity Commission (T&TEC), can only use about 100-150 MW – but under contract arrangements they have to pay about US$130M annually for the entire 720 MW! (For comparison, GPL has about 200 MW capacity versus T&TEC’s 2 400 MW.)
The T&TEC naturally wants the T&T Government to pay for the almost US$90M extra per year. So they are looking to recover as much of it as possible by selling the overcapacity. The SCCC feel they can land a 400 km submarine cable to Anna Regina and offer electricity at 12-15 US cents per kWh, about half the present price we pay in Guyana.
What is in it for Suriname?
The Surinamese are apparently very keen on the idea. They are aware of all the environmental, economic and technical advantages of such a project. They plan to develop their hydroelectric potential with the help of the Brazilians and want to be able to have a market for the power they will eventually generate. Don’t forget they also have bauxite and might like to have the large amounts of electricity to operate an aluminium smelter.
What is in it for Brazil?
The overriding reason the Brazilians are interested in getting hydropower from Suriname, Guyana or Venezuela is that the Brazilian grid has an electricity shortfall during their dry season in the south – at the same time we in the north are having our wet season. (The present troubles of Petrobras are irrelevant to this fact.) That is why they are now looking to build 3 GW of hydropower here, but at only a small fraction of the area that would have had to have been flooded for the UMDA project under the Burnham PNC government, because we would be able to access in our dry season the surplus they produce during their southern wet season.
What is in it for Guyana?
There should be the same benefit to Guyana as to Suriname, except that the landed price in Suriname will be a little higher after passing overland through Guyana, but still they are enthusiastic. In fact all they want is for the Guyanese authorities to allow the cable, whether or not the power is used in Guyana.
The SCCC cares not where the Guyana hydropower comes from, except, of course, that it is properly constructed to deliver the contracted power – and not go the way of the Moco Moco hydro. Of course, hydropower is not the only renewable energy source. There are others like solar, biofuels, and cogeneration power that can be exported should we choose to develop them.
The T&T overcapacity arose because they had planned for an aluminium smelter in Trinidad. However, it would be better and more advantageous if such a smelter is nearer the bauxite and alumina source. We would then be able to produce and export aluminium. This would apply equally well to Suriname.
Since the cheapest cable is the shortest, it must land in Essequibo, and blackouts there should become a thing of the past. It would open up that area to other forms of development, and less fuel would need to be transported there.
Financing
The following is required:
US$500k Technical assistance for completion of pre-feasibility
US$10M Feasibility assessments for bankability
US$700M to link Trinidad/Guyana
US$300M to connect to Suriname
All but one of the possible participants above has given indications of their intent to take part in the project. That one is Guyana: there is no publicly known expression of interest from the public sector (government, GPL), and it is hard to believe they can be ignorant of these ideas. The private sector seems to lack the information or enterprise to pronounce on something of this magnitude without encouragement from the government.
The investment can be spread over time, because the Trinidadians are capable of initiating the project and benefiting immediately by losing less. In fact the financial mechanism for converting the entire regional electricity sector from oil fired generation to gas-fired and renewable energy capability is the US$1 billion Caribbean Energy Thematic Fund, announced by Prime Minister Kamla Persad-Bissessar at the Caribbean Security Summit chaired by US Vice President Joe Biden in Washington, USA in January this year. There are hopes that the Caribbean Development Bank will also participate.
Whoever comes up with their share of the money can benefit even without waiting on the others, though of course it would be better to have everyone cooperate. The negotiations for shares and returns on investment should best be facilitated by Caricom since the Secretariat is well positioned in Guyana, which is the only problem, because it is the bottleneck, since Suriname is too far for a submarine electric cable to reach with present technology.
I have already strongly opined that the present Guyana government’s Amaila Falls Hydropower Project (AFHP) is highly uneconomical, especially as we cannot even be told what will be the price of the electricity from it. The APNU+AFC vision of a larger and allegedly more wholesome AFHP is not visible yet, but it will definitely suffer even more from lack of immediate financing.
I believe that what I have outlined above is presently the most sensible option in a necessarily complex endeavour over time, the complexity of which has eluded all the possible Guyanese players who possibly feel their simplification is the one that will work.
Yours faithfully,
Alfred Bhulai
