As negotiations continue with China Railway Group Limited on the Amaila Falls Hydropower Project (AFHP), Finance Minister Dr Ashni Singh has announced that construction is slated to commence later this year.
Speaking on “transformational infrastructure” during the 2022 budget presentation on Wednesday, Singh said the bridge should be completed by the fourth quarter of 2024.
“Our most promising venture continues to be the AFHP… We have requested, received and evaluated proposals for this project, and negotiations are underway with the highest ranked company which is an experienced international company,” the minister told the House.
The development which is being executed under a build-own-operate-transfer (BOOT) arrangement within which the Guyana Power and Light Incorporated (GPL) will purchase power from the operator under a Power Purchase Agreement (PPA) is anticipated to become operational by 2027.
Once operationalised, Singh said the facility will significantly reduce the cost of energy for both businesses and households.
In his speech, he lamented that had the project not been derailed by the former APNU+AFC Coalition government, it would have “been meeting the needs of the national grid today. Be that as it may, the time for fixing this problem is overdue.”
In November last year the Ministry of Finance announced that the project had received the blessings of cabinet and had given its no objection to the office of the Prime Minister, which has responsibility for energy generation to engage the Chinese company on the venture.
GPL is expected to purchase electricity at a cost not exceeding US$0.07737 per kWh and retailing at approximately 15c per kWh.
With this model, Guyana will not be investing any financing 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 on the announcement of the project.
Four companies – three Chinese and one Brazilian – responded to government’s Request for Proposals (RFPs) for the resuscitation of the AFHP.
According to the RFP, the Summary of the Scope of Works entails a 165 MW installed hydro dam, plant, and related works; Transmission Line and Structures: 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 had 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 asked 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.
In September 2012, the then PPP/C government led by former President Donald Ramotar signed the agreement for the construction of the project with Sithe Global and China Railway First Group.
The hydropower 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, the then opposition A Partnership for National Unity (APNU) and the Alliance For Change (AFC) had used their one-seat majority to halt the project. Sithe Global later announced that it was pulling out.
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.
