A Korean group has indicated its interest in submitting a proposal for the construction of the Amaila Falls Hydropower Plant (AFHP), Vice President Bharrat Jagdeo has said.
“We don’t have a problem reviewing any terms or any proposal coming from anyone, but it has to be favourable,” Jagdeo said on Thursday during a press conference at the Office of the President.
According to Jagdeo, a visiting Korean delegation, which met with him last week, indicated the interest in the project and that they will submit a proposal for review.
“We met with a group of Koreans from Hyundai. They want to submit a proposal,” he noted.
A statement from the Office of the President had indicated that a high-level South Korean-US business team was on a visit here.
The team is led by Chief Executive Officer and President of Global Trade and Finance Inc, K.J. Lee and includes 35 companies, including 14 Korean and 21 from the US.
Among them are Hyundai Engineering Ltd, Korea National Oil Cor-poration, a South Korean indoor farming company (Farm Café), PRW USA International Inc (manufacturers of air conditioning units, Samsung energy) and ABC United Finance Corp.
The statement said the delegation is exploring investment opportunities in both the public and private sectors in several areas including smart agriculture, healthcare, infrastructure and energy.
A meeting was held at the Arthur Chung Conference Centre and the President Irfaan Ali urged the local private sector representatives to make good use of the opportunities highlighted through “bold thinking” presentations and to forge necessary partnerships.
Jagdeo stated that in their preliminary discussion it was made clear that government remains interested in a Build-Own-Operate-Transfer (BOOT) model.
With the BOOT model, the company will put up the financing and retail power to the government after a number of years.
Jagdeo explained, too, that the government had intentions of working with the US and other countries to have the project realised.
He added that when President Ali led a delegation to Washington in July they had engaged the US Department of Energy on the project.
“We want to buy power. The last project failed because the Chinese firm that won the bid wanted to shift from BOOT to EPC [Engineering, Procurement and Construction plus financing] and then we annulled the award,” he noted.
The government had no other choice but to terminate the months-long negotiations as China Railway First Group Limited (CRFGL) was unable to put up the financing for the controversy-ridden project.
“It’s ended. We have to go back to the drawing board and possibly re-tender at some point in time in the future… right now we are still deciding whether we will go out to tender and in what form, but most likely it will be BOOT again…,” Jagdeo said, while responding to questions on the sidelines of the opening of the National Toshaos Conference at the Arthur Chung Conference Centre back in July.
Jagdeo at that time pointed out that there was no commitment at this point in time to re-tender for the project as the government is now focused on getting the Gas to Shore Energy project off the ground. Nonetheless, he stated that government will continue to work to have the hydropower project actualized as part of its energy generation plans. The country’s intended energy mix includes AFHP along with solar farms and the gas to energy project to aid government’s goal of achieving the cutting of carbon emissions by 70% by 2030. “We hope to get it and it is still on the cards but currently not moving,” he said of the project.
In May, Jagdeo had disclosed that CRFGL had advised they were “having a hard time doing the BOOT Contract and they want to shift to an EPC plus financing, where the government finances the project and they will be the contractors.” The suggested model of financing by CRFGL was not in compliance with the terms under which the company bid for the project. Jagdeo had said “they simply can’t raise financing,” when asked about the challenges in the negotiations. The project would have cost roughly US$1 billion. Since last November government has been in negotiations on the project, which has been on and off its agenda for over 15 years.
“The last six months we have been struggling to reach an agreement. We will have to give a deadline and cancel if they can’t proceed with the original model…The tender was about Build, Own, Operate, Transfer, not a EPC Plus finance model…so we may have a setback on that,” Jagdeo said in May during a press conference.
Jagdeo responded in the negative when asked if there are considerations to engage the second most competitive bidder, stating that that bidder proposed a higher retail selling figure per kilowatt per hour – US 9.9 cents. CRFGL, in their bid, proposed to sell electricity to the government at US$0.07737 per kWh. With the gas to energy project set to come on stream some years from now, Jagdeo said it would not be feasible to lock in an agreement to purchase electricity higher than US 6 to 7 cents per kilowatt hour. He stated that when the project was initially conceptualised and undertaken by Sithe Global, a subsidiary of Blackstone, government was prepared then to purchase electricity at US 10 cents per kilowatt per hour since Guyana was generating electricity at twice that cost.
At the May press conference, Jagdeo, when questioned on whether government is prepared to engage in an EPC financing model should they return to tender, said there has been no consideration regarding the utility of that model and extensive discussions will have to be undertaken before a commitment can be made. The contention then was that the BOOT model chosen for the construction of the AFHP was well thought out since government did not want to incur any debt. Under the BOOT arrangement, CRGL would have operated the project for twenty years before transferring it to government. CRGL was awarded the contract on Cabinet’s no-objection after being deemed the “most capable partner” for the project.
Jagdeo last November had said “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,” while making reference to a Norway study done after the former David Granger-led administration took office. He explained that despite the delays and shelving of the project by the APNU+AFC coalition-led government in 2015, Guyana stood to benefit from a better deal. According to Jagdeo, in the initial deal, electricity would have been purchased at US 10 cents per kWh, but under the new deal GPL will be purchasing electricity at US 7 cents per kWh or lower. The hydro project, previously pegged at US$858.1 million, was the pre-2015 PPP/C government flagship project. However, then opposition A Partnership for National Unity (APNU) and the Alliance For Change (AFC) used their joint one-seat majority to effectively halt the project. Once in government in 2015, the APNU+AFC coalition scrapped the project, citing costs and other concerns, while signalling that it was focusing on an energy mix with natural gas as a prime component.
