Believing that the Amaila Falls Hydropower Project (AFHP) is still viable and having received expressions of interest from foreign investors, the government will soon seek Requests for Proposals (RFPs) for the project that was halted more than a decade ago.
“We are hoping, maximum within two weeks, to go out back for the request for proposal. Up to last week we had another interest from a Brazilian company. We have had a company from Austria, we had several from Korea… So now I think there is a large number of people approaching us and the best way to do this is through a public process – a request for proposal; a bid process,” Vice President Bharrat Jagdeo announced yesterday.
“What they have to do is update the data from the last request for proposals and there are some elements like the change in demand and all of that. But we had most of the documents from the past already,” he added.
Months after the PPP/C took office in 2020, Jagdeo had opined, “Amaila still remains the best option for meeting base load 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 was making reference to a Norway study done during the David Granger-led administration.
Last May, Jagdeo had told a press conference that Chinese investor, China Railway Group Limited (CRGL), was unable to finance the construction of the roughly US$1billion project, and had written to the government requesting that it consider a different model of financing. He said that would have required re-tendering for the controversy-riddled project.
He had said that they were “having a hard time doing the BOOT (Build, Own, Operate and Transfer) contract and they want to shift to an EPC [Engineering, Procurement and Construction] plus financing, where the government finances the project and they will be the contractors.”
According to Jagdeo, that suggested method of financing was not at the time possible, since those were not the terms under which the company bid for the project.
“We are still in negotiations. We are still trying to get them to meet the commitment that they had bid for… If we can’t change that we can’t get it done under the BOOT, we can’t proceed with the company, we will have to re-tender. We will not be able to conclude the contract,” he had said.
Government had been in negotiations since November 2021 and had not been able to make headway for an agreement on the project which has been on and off the 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 an EPC plus finance model… so we may have a setback on that,” Jagdeo said.
The Vice President said that while this would delay plans for the energy sector, the PPP/C government remained committed to ensuring that the cost for energy was reduced by 50%.
Pressed on what difficulties the company has been experiencing, Jagdeo said “they simply can’t raise financing.”
When asked if there are considerations to engage the second most competitive bidder, he responded in the negative stating that that bidder proposed a higher retail figure per kilowatt hour – US 9.9 cents.
The company later pulled out.
CRGL, in its 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 by 2025, Jagdeo had reasoned that 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 was being undertaken by Sithe Global, a subsidiary of Blackstone, the government was prepared to purchase electricity at US 10 cents per kilowatt hour since what was being generated cost twice as much.
Questioned whether the government was prepared to engage in an EPC financing model should the contract return to tender, the Vice President had said no consideration was given to that and it would have to be discussed extensively before any commitment was made.
It is unclear what model would be used this time around, but it would be well thought out as government did not want to incur any debt.
Under the BOOT arrangement, CRGL would have operated the project for 20 years before transferring it to the government.
The company was awarded the contract on Cabinet’s no-objection after being deemed the “most capable partner” for the project.
A release from the Ministry of Finance had said the Chinese company would provide the entire equity required and undertake all the risks associated with the project and as such, Guyana would not be investing any finances.
