$21B Budget cut not cast in stone – Luncheon

May 04, 2012 News

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– Greenidge insists Amaila Falls project not threatened

 

By Gary Eleazar

While not elaborating, Head of the Presidential Secretariat Dr Roger Luncheon yesterday reiterated that Government will seek to ensure that its equity is in place for the Amaila Falls Hydro Electric Project.
The government’s spokesman was at the time speaking at his weekly post-Cabinet media briefing when he said that the $21B cut to the 2012 Budget, which includes Guyana’s equity for the project, is not cast in stone, and pointed to intimations by the opposition as it relates to approving supplementary funds.

Leader of A Partnership for National Unity Brigadier (rtd) David Granger has committed to approving supplementary funds to compensate for the 21B slashed out of the budget, as long as the reforms demanded are put in place.
Dr. Luncheon said that there is still some time before the financial closure for the project, explaining that “a possible three-month window remains”.
Sithe Global, the developers of the project, had suggested that should financial closure with the Inter-American Development Bank (IDB) not be finalized by June, then the project could be shelved for several years.
Dr Luncheon, however, is looking to a more flexible timeframe.
The man who spearheaded the Budget cuts, APNU’s Carl Greenidge, said that the June deadline is not as definitive as being preached, and asked why the IDB has delayed the approval for the loan for such a long time.
He questioned also why the government did not approach the World Bank or the European Investment Bank to plug the required US$175M for the project.
The Former Finance Minister in referring to his tenure in office said that while he held that position he was not quick to rush to ink agreements when a deadline loomed.
He said that the cuts were meant to send a message and added that the government would have gone to the International Financial Institution and proclaimed consensus on the project as well as pointed to parliamentary approval.
Greenidge stated that as it relates to the projects to be funded using the money from the Kingdom of Norway there have been no consultations. He said that even the private session held with the political opposition by President Donald Ramotar “was but a show”.
He explained that for such a technical project, making a presentation to a few selected politicians does not constitute consultation.
Greenidge insists that the budget cut will not threaten the life of the project and further, with the price tag attached to the project, questions whether it should have even be undertaken.
Head of State Donald Ramotar on Tuesday, last, had expressed concern over the impact of the Budget cut on the Hydro power project, but stressed that Government will press ahead to ensure that the equity is in place.
Greenidge suggested that the president may be hinting that the moneys would be sourced from the National Industrial and Commercial Investments Limited.
The APNU parliamentarian is adamant that the moneys for the project in the Budget should be reflected as a foreign inflow and disagrees with the substantive minister’s explanation for its representation in the estimates.
Dr Ashni Singh during the probe of the estimates for his Ministry had sought to explain that the money for Guyana’s equity in the project is reflected as local funds, given that government considers the funds from Norway as revenue and not a loan or grant.
“When the Inter-American Development Bank sees this, what do you think will be their attitude?” President Ramotar asked on Tuesday, last, while expanding on the impact of the cut in the budget on Guyana’s equity in the Amaila Falls Hydroelectric Project.
At present, the future of the project hinges on the US$175M currently being negotiated with the IDB.
Days before the Finance Minister presented the 2012 Budget, IDB President Luis Alberto Moreno, visited Guyana and met with President Ramotar, where discussions were held on the project.
While the Head of State failed to disclose any details of Moreno’s visit and concerns leading to the delay in financial closure, Ramotar said that the visit represented a sign of optimism for the project.
The Hydro project is pegged at US$840M with China Development Bank (CDB) plugging some US$413M into the venture; its contracted developers, Sithe Global, has committed US$152M and Guyana, as its equity, some US$100M.
Bruce Wrobel, Chief Executive Officer of Sithe Global, while on a recent visit to Guyana, said that the company was looking to effect financial closure for the project with the IDB by next month.
He had warned that should this not be achieved, given the volatility of the Chinese currency against the US Dollar, the project could be shelved for another decade.
The IDB’s concern, which has led to the delay in the financial closure, in large part rests with Guyana Power and Light’s ability to manage the 165MW project, particularly revenue collection and line losses.
“We are going to push, I have not given up on it…This is a good project for the IDB, this is a good project for the Chinese,” said Ramotar as he continued to defend Guyana’s drive for hydropower capability.

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