Guyana was to have Hydro Power from today

Aug 01, 2010 News

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According to a Memorandum of Understanding (MoU) signed in 2006 by Makeshwar Fip Motilall for Synergy Holdings Inc, Prime Minister Samuel Hinds as Minister with responsibility for energy, and the then Chairman of Guyana Power and Light, Ronald Alli, the Amaila Falls Hydro Electric Plant (AFHEP) should have begun generating power from today. That MoU was signed on May 23, 2006 in the Office of the Prime Minister.

Moreover, the Government MoU that was signed with ‘Fip’ Motilall never included the fact that a road needed to be built to facilitate the construction of the plant despite the obvious inaccessibility of the site.
That MoU has since been discarded and the Hydro Electric Project been handed to Sithe Global. Motiall has now been awarded a US$15.4M contract to build the access road to the site.
When asked yesterday about the MoU that he signed, Prime Minister Sam Hinds said that he did not recall signing any such document given the fact that he signs many documents on a daily basis.
The Prime Minister further said the questions being posed to him were specific to the MoU which was not at hand; hence he was not in a position to provide answers. He then asked that the questions be forwarded to his office.
The MoU signed with Motilall also contained an Engineering, Procurement and Construction Agreement (EPC) in effect with Synergy and Wartsila Finland Oy, which this newspaper learnt was never instituted.
The EPC agreement was for the purchase, dismantling and reassembling of a 25 MW thermal generation plant to be installed in Kingston. .
In the “Conditions and Precedent” section of the MoU, it is stated that “the EPC has been executed and is in effect” which was not the case but the Government and GPL still signed on to the construction of the plant with Motilall.
This newspaper has learnt that Motilall never had an agreement with Wartsila and had tried to source the 25MW generator from numerous sources, including Mexico, but to no avail. He had even sought the assistance of Sam Barakat, although in the Memorandum he had stated that he had sourced the power plant.
Four years later, the Government of Guyana had to install additional power generation capacity at the Kingston plant.
In the same MoU, a Power Purchase Agreement (PPA) was agreed to for the delivery of electricity to the Sophia site at a price that was not supposed to exceed US$.075 per kwh.
This agreement was subject to review with the investors obtaining an internal rate of return of 25 per cent for 25 years.
When the officials held a briefing at the Tower Hotel in 2006, it was said that the PPA provided for the purchase of electricity at 7.6 US cents.
President Bharrat Jagdeo in his most recent press briefing said that in the agreement with Sithe Global signed recently in China the PPA is for 10.9 US cents per kwh.
At the conclusion of the 25 years that Synergy was supposed to have ‘Own Operate and Transfer,’ the MoU says that the original Amaila Falls Hydro Electric Project (AFHEP) power purchase agreement shall be extended for an additional 10 years.
As part of that MoU, the Government of Guyana committed to define prior to the execution of the AFHEP PPA, the package of financial incentives, including tax benefits available to AFHEP.
At the time of the signing of the MoU, the Hydro Electric Plant was projected to cost some US$300M.
President Bharrat Jagdeo now pegs the price at about US$450M whilst the developers say US$650M
Hinds, at a 2006 briefing, had told media operatives that Synergy Holdings Inc. headed by Motilall – a Guyanese living in the U.S. – began working with a number of North American partners as early as 1996, to pursue a hydropower development at Amaila Falls to supply the local electricity grid.
President Jagdeo, who was also speaking at that forum, said that the development of Guyana’s hydro-power potential has been a “long national aspiration.”
He said past attempts to develop the country’s vast hydro-power resources have been met with various challenges.
“At present (2006) the Amaila Falls hydro-power project is the most advanced hydro-power project… this project will also provide affordable reliable energy that will act as a springboard for investment and development in many areas,” the President told those gathered at the forum.
He was also optimistic that the availability of reliable and affordable electrical energy will “provide the impetus for exponential growth in this great country”.
The potential for hydro-power in Guyana is estimated to be in the region of 7,000 MW, representing a major opportunity for Guyana, both as a primary source of power for domestic consumption and as a place for the development of large scale industries which require significant electricity capacities such as aluminum smelters and the production of hydrogen based fuels, the gathering was told.
Jagdeo noted that hydro-power – renewable energy produced from water – has great potential in Guyana with more than 67 possible hydro sites in the country.
What has never been publicly disclosed is why the MoU with Motilall was discarded and if any penalties were levied against him for defaulting.

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