Four companies ink Amaila Falls deal in China

Jul 16, 2010 News

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– loan size not disclosed

The Guyana Government and China Development Bank yesterday signed off on a loan deal that will pave the way to start Guyana’s single largest project ever, the Amaila Falls Hydro-Electric Project (AFHEP).
Finance Minister, Dr. Ashni Singh, yesterday during a sitting of the National Assembly yesterday, described the signing as “historic.”
He was at the time utilizing the opportunity to disclose that President Bharrat Jagdeo witnessed the signing of a framework agreement between the parties of the project which the developer, Sithe Global, has pegged at US$650M.
Specific details of the agreement such as the exact amount of money involved are yet to be disclosed.
The President, had travelled from a United Nations climate forum in New York, to join the team led by Minister of Tourism, Industry and Commerce, Manniram Prashad, for the meeting with the China Development Bank and Sithe Global.
Head of the National Industrial and Commercial Investments Limited, Privatisation Chief and Chairman of the Board of Directors of the Guyana Power and Light Inc. (GPL), Winston Brassington, had travelled to China last week to set up the meeting.
According to Dr Singh, the signing will formalize the cooperation between GPL, Sithe Global Amaila Holdings Limited, China Development Bank and China Railway First Group Company Limited.
While Minister Singh did not mention any details including the amount of the loan, he revealed that the agreement clearly sets out the parties’ intent to bring financial closure within 12 months, or “ideally…sooner”.
Already for this project, the Guyana government has committed between US$40M to US$60M of the Norway/Guyana climate fund for the AFHEP.
According to Dr. Singh, the signing of the agreement is a truly historic moment especially with the project tagged as the country’s biggest infrastructure investment ever.
Not only will it give value to Guyana’s economy by the provision of cheaper electricity, it will reduce Guyana’s 100 per cent dependency on fossil fuel for electricity generation to 100 per cent clean electricity, according to Dr Singh.
After 20 years, the project will be transferred to Guyana at “0” dollars, given that it is a Build Own Operate Transfer (BOOT) project.
According to the Minister, the project would take up only 0.001% of the state forest.
The Guyana government, he stressed, is fully committed to ensure that the project complies with both national and international social and environmental safeguards.
Last week, Jagdeo said that the project sponsor, Sithe Global has to deal with the financial closure of the project.
“Basically Sithe has to deal with this…the government of Guyana is not contracting a loan and is putting up minimal equity in the project at this stage,” Jagdeo told Kaieteur News in Montego Bay, Jamaica where he was attending a Heads of Government Meeting of the Caribbean Community (CARICOM).
Sithe Global has put the price of the project at US$650 million, but the government has also spoken about the cost of the project being at least US$150 million less than that.
According to Rafael Herz, the Sithe Global Project Manager for Amaila Falls Hydropower Project, “The total cost of the dam, powerhouse, transmission line, and substations is estimated at US$650M (including an estimated US$190M for the transmission line and other supporting infrastructure).”
Sithe Global had said that it will ultimately contribute US$150 million of the equity.
The comapny had also claimed to have already spent in excess of US$5M on the development of the project.
President Jagdeo told Kaieteur News that the company is spending over US$1 million to do an environmental impact assessment on the clearing for a road and the hydro power project itself.
“Work is being done on all the agreements so they would have financial closure before the end of the year,” Jagdeo stated.
“Hopefully by that time the road would have progressed to a point where they can start quickly,” he added.
Jagdeo had expressed fears about the company sitting on US$450-US$500 million, while interest builds up, waiting on the access road to be completed to start the actual hydropower project.
Sithe Global which is a subsidiary of Blakstone Group is currently building one of the most controversial hydro power plants in the world namely the Bujugali Plant in Uganda, Africa.
Scrutiny of the only Hydro Electric Project that the company which was formed in 2004, namely the Bujagali Project has revealed that it is a nightmare for Uganda.
According to the Bank Information Centre, “A Ugandan government document projects that the 250 MW Bujagali hydroelectric power station under construction on the Nile River in Uganda will in fact raise power costs despite claims by the project sponsor, Bujagali Energy Limited (BEL), that power tariffs would decrease once Bujagali becomes operational….With a price tag of $860 million and climbing on news that unforeseen engineering challenges will further delay the project, Bujagali is now among the most expensive hydropower plants in the world.”
The project had been originally slated to cost some US$530M.
There are reports that there has been protest over the dam as well as complaints that the project was not subjected to competitive bidding, and that locals will anyway not be able to afford the electricity it produces.
International groups who have been lobbying for a full and fair review of Uganda’s energy options point out that Bujagali is unlikely to meet the needs of the 95 per cent of Ugandans who live far from the national grid and have never benefited from modern energy services.
Sithe Global has two projects under construction, namely the controversial Bujagali Hydroelectric in Uganda, and the Mariveles Station which is a 600 MW station on the Bataan Peninsula, on the island of Luzon in the Philippines.
The Mariveles project, according to the company “will consist of two identical 300 MW power blocks using proven Pulverized Coal Combustion technology.”
Apart from the Amaila Falls Hydroelectric Project the company has several projects as, “In Development” and notably none of them are Hydroelectric Projects.
Synergy Holdings Incorporated whose President is Makeshwar ‘Fip’ Motilall has already secured the road project.
That project is already little behind schedule with the first batch of equipment slated to arrive on July 21 with some 35 pieces of equipment.
Most of the Preliminary Designs have been submitted and are currently being reviewed.
The contract is for the upgrade of approximately 85 kilometers of existing roadway and the design and construction of approximately 110 kilometers of new road.
The works also include building bridges across the Essequibo and Kuribrong rivers. In addition, the contract takes into account clearing the way for the installation of a 65-kilometre transmission line.
The Amaila Falls hydro-project is expected to supply 150 megawatts of electricity.
The Amaila storage dam site would be located near the top of Amaila Falls and would impound
the waters of both the Kuribrong and Amaila Rivers.

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