With China Railway Group Limited found to be the “most capable partner” for the development of the Amaila Falls Hydro Project (AFHP), Cabinet has given its no-objection to the Office of the Prime Minister to engage the Chinese company on the venture, which is expected to see Guyanese accessing cheaper electricity.
The Ministry of Finance last night announced that the Prime Minister’s Office would engage the firm to construct the project under the Build-Own-Operate-Transfer (BOOT) model, where the company will supply electricity to the Guyana Power and Light (GPL) Inc at a cost not exceeding US$0.07737 per kWh.
With this model, Guyana will not be investing any finances into the project as the company, which the ministry said was identified by the evaluation committee as the “most capable partner,” will provide the entire equity required and undertake all the risks associated with the project, the ministry said.
At a press conference earlier in the day, Vice President Bharrat Jagdeo said that government will soon negotiate and iron out terms and conditions of the contract with the company.
According to him, the project remains one the best environmentally friendly options for the production of baseload electricity.
“Amaila still remains the best option for meeting baseload renewable energy for Guyana. That is the only way you can decarbonise, so the only way to achieve renewable energy is through the construction of the hydropower,” he said while making reference to a Norway study done after the former David Granger-led administration took office.
He explained that des-pite the delays and shelving of the project by the APNU+AFC coalition-led government in 2015, Guy-ana stands to benefit from a better deal. In the initial deal, he explained, electricity would have been purchased at $10c per kWh but under the new deal GPL will be purchasing electricity at $7c per kWh or lower.
Jagdeo indicated that further negotiations will be required and it is possible the country will be able to get electricity at a cheaper cost. It is government’s intention to retail power at $15c per kWh.
Four companies – three Chinese and one Brazilian – responded to government’s Request for Pro-posals (RFPs) for the resuscitation of the AFHP, which is expected to begin construction by the middle of next year.
Government wants the project to be completed and commissioned by the end of 2025.
The Ministry of Finance in a statement last night pointed out that the AFHP will lower the cost of electricity needed to power Guyana’s economic diversification and transformation it into a low carbon economy, as well as reduce the cost of power to the businesses and households.
The project will also support initiatives such as the electrification of transport and e-mobility and accelerate the development of a robust ICT sector needed as well as a competitive manufacturing sector, the statement added.
According to the RFP, the Summary of Scope of Works entails a 165 MW installed hydro dam, plant, and related works; Trans-mission Line and Stru-tures: 270 KM double-circuit 230 KV from Amaila to Sophia; 230 KV Substations in Linden and Sophia; Creation of a 23 square KM storage reservoir; upgrades and completion of roads and bridges to the site (85 KM new; 122 KM existing); and assumption of all geo-technical risks including guarantees relating to the structure of the reservoir, dam, and transmission towers.
Government has asked that proposals submitted by prospective developers be made under both the BOOT and Design-Build-Finance (D-B-F) models.
Under the BOOT model, it asks that firms state the cost/ kWh [and equivalent annual payment] for power delivered to Sophia, Georgetown, on the basis of a 20-year BOOT (period starting from Commercial Operations Date), with all of the costs of the project to commissioning date, being borne by the Developer, and the project reverting to the Government at the end of the BOOT period, at no cost. All appropriate assumptions including cost of capital, equity, debt, and operating costs should be stated, it added.
The hydro project, previously pegged at US$858.1 million, had been the flagship project of the PPP/C government when it was in power pre-2015. However, then opposition A Partnership for National Unity (APNU) and the Alliance For Change (AFC) had used their joint one-seat majority to halt the project.
Once in government in 2015, the APNU+AFC coalition scrapped the project, citing costs and other concerns, while signaling that it was focusing on an energy mix with natural gas as a prime component.
A Norconsult report, which was meant to be a final study of the project and commissioned under the Guyana-Norway partnership, was generally favourable towards the venture but the APNU+AFC government interpreted it differently.
In September 2012, the then PPP/C government led by former President Donald Ramotar signed agreement for the construction of the project with Sithe Global and China Railway First Group.
