Guyana needs hydro power, but not at an unbearable cost to its already suffering people

Jul 20, 2010 Letters

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Dear Editor,
In a July 3 letter published in Kaieteur News, “Are PPP leaders, like many Guyanese, having buyers’ remorse over the President?” I referenced President Bharrat Jagdeo’s brain-dead Low Carbon Development Strategy (LCDS), which he has been trying unsuccessfully to link to the much touted Amaila Falls hydro project.
I also referenced his government’s publicly hostile reaction to the WB/IDB after it claimed it never received any plans for the hydro project, even though the President is on record mentioning the WB/IDB playing a role in it. I specifically wrote: “This (hydro) project has been the subject of much public scrutiny and criticism, and unless the Chinese decide to come through with a surprise financing package, this Guyana Government – World Bank brouhaha could be sending a bad message to other financial institutions.”
Lo and behold, twelve days later, on July 15, Minister of Finance, Dr. Ashni Singh, told the nation via Parliament, that the government had inked a deal with China Development Bank in China for the financing of the Amaila Falls hydro project. Well, to be fair to the President, he mentioned the role of the Chinese before I did, according to a May 31, 2010 news item in Stabroek News, “Government and developer cite different costs for Amaila hydro plant.”
In that news story, the President reportedly said financing ‘for this project comes from two sources – debt and equity’, and that ‘the debt is expected to come from the Chinese and the IDB at single digit rates’. Another source said the US$15.4 million set aside for the building of the road to the site, was part of the government’s equity in the project.
Where did he get his IDB single digit rates assurance from if the IDB never saw the plans? Uh-oh! And with the Chinese giving us a loan, does this mean the IDB is completely out of the picture? If it is, then did the Chinese come up with the full amount for the project, and if so, how much is the loan and did they offer single digit rates?
I am asking these pertinent questions because they bring me right back to the reason for mentioning in my July 3 letter the Chinese as the lone go-to alternative to traditional international financial sources out there. The dictatorial Chinese Government, much like its little dictatorial brother in Guyana, is notorious for secrecy in government dealings and censoring information destined for the public.
The Jagdeo Government so far, despite claims of being democratic, transparent and accountable, seems hell bent on keeping a tight lid on the details of the actual loan deal. But if it turns out that the government is the guarantor of the loan, then should the project collapse (as the first Marriott did), it is the people of Guyana who will be saddled with repaying the loan anyway.
My second reason for mentioning the Chinese as the lone go-to alternative is that the Chinese would readily agree to give a major loan to a government, not that easily to a private company, for a project like this without necessarily reviewing all the details of the project’s viability and estimated costs, as long as the government is directly involved, and especially if it is the guarantor of the loan.
Still, it would be good to know if the Guyana Government presented plans for this project to the Chinese in order to qualify for the loan. The reason is, if it did, then why didn’t it present the same plans to the IDB, seeing the Chinese and the IDB were said to be the financers of the project? If no plans were presented to the Chinese, my point is made.
Meanwhile, Guyanese who may be quick to applaud the President for helping secure the Chinese loan need to remember it was he who said in Jamaica recently that ‘the Government of Guyana is not contracting a loan (but) is putting up minimal equity in the project at this stage’. Now, if the government is putting up minimal equity yet the government was behind the securing of the Chinese loan as a guarantor, does this not expand the government’s role as a co-contractor, thus contradicting the President’s claim in Jamaica?
There is definitely need for clarity on this loan, but Guyanese still have to question the initial arrangement that said the project will be privately financed and privately operated so all private partners can recover their investments before it is handed over to the government for the Guyana Power and Light (GPL) to sell electricity.
Actually, after 20 years, the project is supposed to be transferred to Guyana at “0” dollars, given that it is supposed to be a Build Own Operate Transfer (BOOT) project.
The manner in which this entire loan deal is unfolding explains in a troubling way why the government never bothered to present its plans to the WB/IDB, in the first place, because it knew the WB/IDB (as well as other traditional financial institutions) would never approve a massive loan for such a project that involves someone of Fip Motilall’s obvious lack of road building experience or Sithe Global, which appears to be in the WB’s doghouse.
According to information I gleaned on the Internet, the WB did approve financing to Sithe Global for construction of the Bujagali Hydroelectric project in Uganda,  but on December 3, 2008, a report revealed the Bujagali project was slammed by the World Bank’s appeals body as one full of risks for one of the world’s poorest countries.
On October 9, 2009, an update showed that the project, with a price tag of US$860M and climbing, is now one of the most expensive hydropower plants in the world and that the project will raise power costs to local consumers. And get this: On October 13, 2009, the National Association of Professional Environmentalists in Uganda (NAPE-Uganda) website reported that “The Ugandan Minister of Energy, Hon. Hillary Onek said the Bujagali project is expensive and a bad project for Uganda.”  You would think President Jagdeo read this indictment of Sithe Global before he adamantly pushed for it to be the builder!
Anyway, from a strictly confidence standpoint, the WB appeared to have lost whatever it had in Sithe Global, and after all the questions about Motilall’s lack of road building experience, the nation has a right to start losing confidence in the government’s defiant push for this project’s current builders to do the job.
Is the massive investment in the Amaila Falls project really to benefit Guyanese electricity consumers or is it all about satisfying the insatiable financial greed of a ‘chosen few’? As with the government’s role in the revived Marriott project, of which we know nothing about the costs, the government is vesting itself in the Amaila Falls project, and we also don’t know the estimated price tag. What’s up with these no-cost projects that involve public funds?
Look, if the hydro project is this integral to Guyana’s LCDS and Guyana is serving as a guarantor of hundreds of millions of dollars in loans for Amaila instead of drawing down on the promised hundreds of millions of climate change dollars for Amaila, then why do we keep promoting LCDS? Something is not adding up here on the promised LCDS windfall or the feasibility of the hydro project, and you don’t need to be a Soviet-educated economist to know this!
I want to close by appealing to the taxpayer-funded opposition parties, the PNC and the AFC, to get up off their laurels and get to stepping with public appearances and statements on this hydro project deal that could saddle Guyanese with a debt burden that could dwarf the debt burden Cheddi Jagan inherited in 1992.
They will add authenticity to what the private media are doing while drawing the attention of the diplomatic community to the travesties of this government. We need the hydro project, but not at any cost to us and benefits to a chosen few!
Emile Mervin

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