Hydro-electric muddle

Jul 22, 2013 Editorial

The Amaila Falls Hydro-Electric Project (AFHEP) has hit another wall. This time, according to the President, “terrorist” actions by the Opposition have now placed the entire project in jeopardy. Almost every Government official has weighed in on the latest imbroglio that played out in Parliament last Thursday night. The Minister of Finance was slightly less censorious in his judgement, saying that the refusal of the Opposition to approve the two Bills related to AFHEP was “an act of sabotage”. The Attorney General focused on the people of Guyana, who, he predicted, would now contract “hydrocele”, which has a quite disreputable connotation in our country.
Apart from the hyperbole by the government, the last Parliamentary session did in fact expose the deep cleavages that separate our legislators: these go far beyond the normal government-opposition divide. This was demonstrated quite clearly in the jockeying between the two sides to “suss out” where each would vote on the second set of bills, which concerned local government elections. The Opposition had already signalled that their votes on the AFHEP bills were not going to be automatic.
But it appears they wanted to imply a quid pro quo arrangement in that if the government approved the local government bills, which the Opposition moved ahead of the AFHEP bills on the Order Paper, they might reconsider their stance. The government, however, assumed an outraged reaction to what they said was an arrogant intrusion of the Opposition into a governmental prerogative: the right to present the business of the Assembly in the order they established.
We then saw a rather ignominious display of schoolyard politics in which each side folded their hands and refused to speak when the “other side’s” bills were to be debated. The result is that all the Bills were now deferred – with the ones on AFHEP disqualified from being returned to the floor in this session of Parliament which ends next month. The tragedy, of course, is that both sets of Bills are of great import to the nation and each should have been debated on their merits – with Hansard recording for posterity the votes of both the government and the Opposition.
We have not had Local Government Elections since 1994 and the gradual anarchy that has overtaken our municipalities and NDC’s is only too visible to our long suffering citizens. There was no need for the Opposition to play games with this bit of legislation: the entire country, and the diplomatic community, would like to know how the government would have voted.
On the substantive aspects of the Bills the government linked to AFHEP, it would have been interesting for the government to clarify as to exactly why they need to have the quantum of debt they could guarantee raised from $1 billion to $150 billion. The government claimed that it was required from the Inter-American Development Bank (IDB) for their participation in the project. The institution is presently conducting a due diligence towards this end.
The leader of the AFC disputes the facticity of the IDB’s request. The more interesting question that could have been asked if a debate had ensued is exactly what debt the government being asked to guarantee. The AFHEP from the beginning has been touted as a “Build, Own, Operate and Transfer” (BOOT) facility – not a “Build, Operate and Transfer” (BOT) with one of the benefits is that with BOOT, the private entity owns it – not the government – and beats assorted risks associated with such projects. These include political, technical and financing risks. We know from previous reports that some US$55 had been allocated by AFHEP for “political risks”
In fact the owner Amaila Falls Hydro, established by Sithe Global Group, is a Special Purpose Vehicle (SPV) specifically designed to protect the backers of the project which include China Development Bank, Sithe, the IDB (hopefully) and the Guyana Government. Is Guyana being now asked to assume all the financial risk to guarantee all the debt for the project? The Government needs give a clear answer to this question.

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Hydro-electric muddle

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