TOO BIG FOR THE PPP!

Jun 01, 2010 Features / Columnists, Peeping Tom

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The publisher of Kaieteur News got a call yesterday indicating that this column was inaccurate in its assessment that Venezuela did not object to the Upper Mazaruni Hydroelectric Project. The caller asserted that Venezuela did object in the strongest possible language to the World Bank, and therefore urged that this column make the necessary correction.
There is no need for that. This column never disputed that Venezuela objected to the Upper Mazaruni Hydroelectric Project. It merely pointed out that there is no evidence that it was Venezuela’s objection that jettisoned the funding from the World Bank. Once it established that this was indeed the case, then the necessary correction would be made.
What the column did state is that in 1976, Venezuela had expressed an interest in supporting the project but that local political considerations caused the government to prevaricate on the offer.
The offer was on the table as late as 1978 when there was an about change in the attitude of Venezuela. By the time 1980 came around, the offer was taken off the table and the project opposed because of the controversy that arose over the impending renewal of the Protocol of Port of Spain which had frozen the territorial dispute between the two countries.
Venezuela then proceeded to take an aggressive stance against the Upper Mazaruni Hydroelectric Project but it was the failure of the Burnham administration to secure funding in the period preceding 1980 that was ultimately responsible for the collapse of this project. The missed opportunity was in not finalising a deal after the 1976 offer.
By 1979 it was always likely that the Americans, concerned about the close ties between Burnham and the socialist bloc, would have blocked any attempting by the World Bank to fund this project. In that era of the Cold War, political considerations were always going to be on the cards.
The Americans were concerned about Burnham’s courtship of the Cubans and his strong ties with the Soviet Union, and in the context of the critical support offered by the PPP to the PNC during that period, was never going to allow the World Bank to fund a project that would have only resulted in the sale of aluminium to the Soviet Union.
And after 1979, it would have always been hard to bring the Venezuelans back on board. After 1979, Venezuela had its own interests but unless evidence to the contrary can be produced, it cannot be said that it was Venezuela’s objection that caused the project to flop.
One also has to ask how could Burnham have conceived of a hydroelectric project which hedged heavily on a hostile neighbouring purchasing power? And to think that the plan for the hydro was announced a mere five years after heated exchanges between Guyana and Venezuela. Yet the project was premised on that country buying the surplus power. No wonder the funding could not be raised.
The lessons for the present administration from that failed project, on which a great deal of money and time was expended, are many. But the main lesson was the failure to bring early financial closure to the deal.
The ruling PPP administration does not now have to contend with the Cold War machinations of those days. But it has to contend with critics who are questioning where the money will be found to finance the Amaila Falls Project.
The Amaila Falls is a far smaller venture but from the way the process has gone so far, it is clear that while it is a far smaller project, it is still much too big for the present administration.
The PPP Government is not likely within the next year to secure funding for this project. Not with elections due next year. Investors are not going to come on board until after the dust has settled on that process.
The PPP administration had close to ten years to seal this deal, but it was not able to do so. It had the perfect conditions to negotiate a good deal when oil prices were low. It now has to do so when oil prices are high. Despite the global climate being presently conducive to green investments, Guyana may have missed its station when it comes to Amaila Falls Hydroelectric Project.
This is why Guyanese have to be skeptical about the project to build an all-weather access road to the site of the proposed hydroelectric plant. If there is no financial closure then the road would have been built in vain.
The PPP may well prove the skeptics wrong. They may well demonstrate that they have what it takes to bring off projects of this size. But they must not fool themselves. The Amaila Falls Project is gigantic when compared to the Providence Stadium or the Berbice River Bridge, and most definitely too big for the government.

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