THE ROAD THAT LEADS TO A PLAN

Apr 19, 2010 Features / Columnists, Peeping Tom

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In the previous contribution on the Amaila Falls Hydroelectric Project, this column took the position that the litmus test of the economic value of this project must not be reduced to mere savings in foreign currency earnings of the fact that it is a non- renewable source of energy.

Rather, this column advanced the view that the economic merits of this project must be judged on the resulting tariffs for electricity. It proposed that in so far as the public interest is concerned, the primary consideration has to be the cost at which the resulting power from the project would be delivered to home and industries.

If this cost is only going to be half of what presently prevails, then it makes better sense to leave the falls untapped. After all, is this not the logic of the Low Carbon Development Strategy: that our natural resources left in their natural state have an inherent economic value and that the global community is willing to provide carbon credits and other forms of financing if we keep our forests, rivers and falls in their natural state?

Is this not why Norway is going to release fifty million United States dollars each year? Is the reason so that we can halt the destruction of our natural resources above existing levels of exploitation?

So why undertake a project to tap the hydroelectric potential of one of our waterfalls when there is no guarantee that it will result in significant economic benefits best measured by the cost of energy delivered to home and industry?

The development of a hydroelectric project has serious environmental risks. Rivers have to be dammed, forests felled to build the access roads and other facilities, large areas have to be flooded and multiple eco-systems are likely to be destroyed in the process.

Has anyone quantified the economic value of these losses and then assessed whether the benefits that will flow to Guyana from having this facility will offset the environmental risks and loss of economic value of this resource if kept in its natural state?

This is not an argument against exploiting our natural resources. It is an argument that says that we should only do so if we are convinced about the economic merits of a project.

To do so requires that the project delivers benefits that far outweigh alternative uses of these resources as well as the economic value of this resource in its natural state and the environmental risks involved.

If this project can show that it can deliver electricity to households at a price that is cheap, by all means let us go ahead with it.

But for the public to be told that it will result in electricity savings of only fifty percent, considering the high cost and inefficient nature of electricity supplied at present by the national grid, is at the least unconvincing about the economic merits of this project.

Yet the government insists that it is a transformative project. Well, that depends on whose pockets are going to be transformed. Will it be the average man who would still have to pay $26 per KWH? Or will it be our local producers and manufacturers who are not likely to become competitive even with a halving of rates? And how are we to even know that the cost of generation and distribution of this project will be as it says it is?

The details of the contract have not yet been made public; we have not been edified as to the terms of the power sale agreement entered into between the government and the person who is going to “sponsor” the hydroelectric plant. The government says that Synergy is not the company sponsoring the hydroelectricity plant. But it does not explain how it is one section of the media quoted an official of that company as saying that the project will reduce electricity costs by half of what prevails today.

Even more amazing is the fact that we are building a road to the proposed site even before we are sure whether this project will materialise.

The financing of the hydroelectricity plant has not been finalised. We are told that the Chinese and the IDB may be involved. How then can three billion dollars be laid out by the government when there is at this stage no certainty as to where the money will come from to complete the falls?

Right now all we have is a plan to build a falls. From all accounts, the financing for this project has not been fully sewed up.

Therefore, to where will this three billion dollar road lead, if the total financing is not found for the project?

It seems to me as if someone wants to leave their footprint on this project before time runs out. It seems as if what will result is a toe print rather than a legacy footprint.

To be continued

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