WHAT ABOUT THE BRAZILIAN DEALS?

Apr 18, 2010 Features / Columnists, Peeping Tom

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The government must disabuse itself of any notion that there is no basis to question the merits of the proposed Amaila Falls Hydro Electric Project.
While the main concern at this point in time is the road contract for the approaches to the falls, there are also concerns about the merits of this project considering the relative paltriness of the reduction in electricity rates that are likely to result when this project is completed.
Not so long ago, when the electricity tariffs for residential purposes were around G$25 per kilowatt-hour (kWh), consumers bawled that the rates were too high. The commercial rates were far higher and ensured that manufacturing in Guyana remained uncompetitive.
Today the residential electricity tariffs are around $53 per kWh. The commercial rates are higher. This high cost for electricity is the main deterrent to the competiveness of local manufacturing. So turned off were some large local manufacturers by these high costs that they then came off the national grid and began generating their own power since they were able to do so cheaper that what could be supplied by the GPL.
The GPL itself has conceded that electricity losses are significant. At one stage it was suggested that technical and non-technical losses amounted to close to forty per cent of the electricity generated. Since tariffs are based on the costs of total generation and not total consumption, with greater efficiency, including the removal of losses, tariffs can be halved.
When one therefore hears that one of the benefits of the Amaila Falls Hydro Electric Project is that it will reduce the cost of electricity by half, which means that residential tariffs are going to be around $26 per kWh, one has to sit up and question the usefulness of this project to Guyana. If tariffs are only going to be halved, it means that it only returns to levels that were high in the first place. So what benefits are we talking about?
Given the amount of electricity that can be generated from this fall and the many other hydroelectricity resources in Guyana, every single household in this country should be receiving electricity for free with a competitive cost being charged to industries.
The cheapest source of electricity in the world is hydro. And notwithstanding the fact that this power has to be distributed and distribution costs are high, it makes no sense to build a hydroelectric plant if that plant cannot deliver power at price that would allow our manufacturers to be at least regionally competitive.
The counter argument to that is that even if the costs are high, the electricity is clean electricity and there would be foreign currency savings to the economy in terms of reduction in the fuel import bill.
There is a tendency in this country to think of foreign currency savings as an end to itself. Instead of thinking about this project in terms of foreign currency savings we should instead be thinking about it in terms of foreign currency earnings, that is, this project will help to boost local manufacturing and production so that we can earn more foreign currency and also ensure that our citizens enjoy cheap electricity in their homes.
Why dam a river and undertake the environmental risks involved when in the end most of the residents in Guyana would still find the tariffs too high? If one of the main benefits that is going to accrue as a result of the hydro plant at Amaila Falls is that of clean power, then would it not be better for us to cut a deal with the Brazilians.
North Brazil has two future needs: electricity and land. This is why the Brazilians have showed an interest in developing super hydroelectricity facilities in Guyana. This is why they have indicated a willingness to build hydroelectric plants that can generate as much as eight times the electricity that can be had from Amaila Falls. Their proposals are to build plants that can generate as much as 800MW of electricity each. They want to export this electricity to meet the eventual needs of North Brazil.
So why instead of committing to the deal at Amaila Falls does the Guyana government not simply ask the Brazilians to do a swap, whereby they would build and present the Amaila Falls Hydroelectric Plant free to the people of Guyana, in return for conditional rights to develop another plant aimed exclusively at providing electricity to North Brazil. The Brazilians would have to foot all the costs for a 100 MW plant in Guyana, plus all the roads, and in turn they will obtain rights to develop a larger plant that would allow them to export electricity.
In this way, both countries win. Brazil gets its power and we get cheap electricity under our own ownership and control thereby allowing Guyanese to enjoy a higher standard of living, plus competitive electricity costs to industry, plus savings in foreign currency earnings and of course through clean sources.
(To be continued)

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