US$840M Amaila Falls hydro…APNU, AFC call for review in light of IMF’s concerns

Dec 02, 2012 News

The two opposition parties in the National Assembly have called for a review of the multi-million-dollar Amaila Falls hydro project, amidst concerns expressed last week by the International Monetary Fund (IMF) over the project’s economic viability.
Both A Partnership For National Unity (APNU) and the Alliance For Change (AFC) yesterday urged government to immediately make full disclosures of the financial arrangements regarding the project which could cost in excess of US$840M, making it the country’s most expensive infrastructural undertaking.

APNU MP Joseph Harmon

On Friday, the IMF, following a routine assessment of the country’s finances, called on Government to take steps to ensure the venture’s economic viability.
The IMF’s Executive Board also “recommended careful consideration of the risks and contingent liabilities arising from that project, and welcomed the authorities’ efforts to pursue international best practices in its management.”
Yesterday, APNU’s Shadow Minister of Public Works, Joseph Harmon, said that following the General and Regional Elections of 2011, the government had made a presentation to the opposition, but things have changed dramatically now with new information.
“We have no objection in principle to the project. What we are concerned about is what will be the cost per kilowatt.”
The Parliamentarian noted that a study was conducted by a university in England earlier this year, which found the production by the 165-megawatt project, in all likelihood, will not be enough in the height of operations. This is in the face of ever-growing demands.
With the power from the Amaila Falls hydro to use transmission lines and infrastructure of the Guyana Power and Light Inc. (GPL), it would be imperative that the state-owned company clean up its act to ensure that the power produced is not lost in leakages.
“GPL must urgently bring its losses down to manageable level. We, as stakeholders, need to see figures. What are we paying? How much are we actually borrowing? What will it cost the Guyanese? We need details.”

Questions
According to Harmon, there are also other issues like the environmental ones that need to be addressed.
“What happens if there is a drought and obviously there is no water? We are saying that the opposition as representatives of the people and stakeholders must be taken into the confidence of the project and be convinced about the project. It can’t be a state secret. We are talking about mortgaging the future of our children.”
Harmon also raised questions about Brazil’s proposal to help fund a major hydro project in the Mazaruni area which seems to have “fallen on the back burners”.
The APNU official said that the mere fact that the issue has reached the attention and has raised the concerns of the IMF should ring alarm bells.
“We are waiting to see what the Inter-American Development Bank (IDB) has to say now. They are supposed to be putting some money into the project.”
Meanwhile, AFC’s Leader, Khemraj Ramjattan, too, has called for a review.

AFC Leader, Khemraj Ramjattan

“As we have been saying, this is a project of immense magnitude and there are many unanswered questions. We are about to place a big chunk of our future on a project that still has many questions marks. The fact that the IMF has recommended Guyana take steps to ensure this project is economically viable is cause for concern. The economists from that organization surely know what they are saying.”
Ramjattan made it clear it clear that the party’s position has been vindicated.

Value for Money
“We want to stress that any hydro project that will lower our energy costs will have the full blessings of the AFC…what we want to know is how is the money going to be spent? That is all.”
The Parliamentarian said that the financial figures as to the cost remain murky.
“Yes, the deal is not fully closed. But there are delays with the road project leading to the site. Before we sign…before we do anything else…talk to the people. What is so hard about that? What are we hiding?”
The IMF is a respected organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
There have been critical concerns over the costs of the Amaila Falls project, set to be built in Region Eight. The project, which will include creating a reservoir, building a station and running transmission lines to the coast, has been described as a key development, by government, to help reduce electricity costs and ensure a stable supply.
Costs for financing the loans, interests and insurance push the final figure to around US$840M. Fluctuations of the dollar could see the costs rising even more.
The IDB will be plugging in US$175M with US$100M in equity coming from the Guyana Government.
The project has been dogged by delays ranging from financial closure to setbacks on the road leading to the project site.
It will be recalled that in January, Government dismissed the contractor, Synergy Holdings, after delays and failure to acquire a performance bond in time. Government had to re-issue the road projects in four separate contracts. It is unlikely, given the weather and harsh terrain, that the mid-2013 deadline for the hydro project to start, will be met.