Hydropower is needed for energy security

May 19, 2013 AFC Column, Features / Columnists

By Sasenarine Singh & Moses Nagamootoo

In keeping with our Action Plan, the Alliance for Change (AFC) remains focused on finding solutions to alleviate the critical problems of our Guyanese people. Primary among these is to provide energy security.
For decades, the people of Guyana have endured an electricity supply that has been expensive, inefficient and unreliable. Our people carry the burden of the giant state-owned monopoly, Guyana Power and Light (GPL)’s poor delivery of power supply and, on top of this, provide billions as bailout and subsidies for its operations.
Taxpayers have already funded GPL to the tune of over $40 billion, and there is still no light at the end of the proverbial tunnel. Whilst GPL is doing patchwork, we know that for us to enjoy affordable and reliable electricity, we have to remove our dependence on imported oil and, whilst the search continues to find and tap our own oil and gas resources, we have to live with GPL.
But must we do so under an uninspiring political directorate and an expensive and incompetent management?
Towards this end, the AFC supports the construction of a hydro project. We see hydro and, in particular, the Amaila Falls Hydro Electric Plant, as one of the primary solutions to our energy security. Hydro facility is a capital-driven enterprise and needs financial guarantee for our investment. Unless this is assured, we could end up throwing money that we would borrow, literally over the falls!
COSTS AND TRANSPARENCY
But even with our position being this clear, the minority Government tries to brush aside our concerns over costs and transparency of the project. Initially, we were told that the price tag for hydro would be US$650 million in 2010. But the goalpost has now shifted to US$840 million in 2013. Originally the State planned to invest equity of US$40 million into the deal, now we are being told by the Finance Minister that the State is committing US$80 million plus to the Amaila Falls Access Road alone.
The Project was expected to commence in the third quarter of 2011. Three contractors have been engaged, under questionable processes, and they have all failed to deliver. Cynically dubbed “road to nowhere”, this vital artery to Amaila Falls remains incomplete after billions wasted or misspent. It appears that no verifiable geo-technical study has been done, resulting in the loss, in swampy areas, of whole machines.
There is no certainty that we would achieve financial closure in 2013. The AFC is alarmed at these developments and demands an inquiry into moneys so far spent. We justifiably cannot commit more of our people’s moneys willy-nilly, without logical and reasonable explanations to justify the expenditure.
TOUGH QUESTIONS
In the meantime, with regard to the Amaila hydro project, Government must answer all the tough questions and not merely duck out by resorting to attack propaganda. Government must say clearly how this Project will affect our balance of payment and our fiscal accounts; what the fiscal risks are and, in the event of the contractor doing a “Fip Motilall” on us, what the full impact would be on the public debt.
It is no comfort to say that moneys for the project will come from Norway or the low carbon development strategy’s “redd+ fund”. These funds are not yet disbursed, but the minority PPP Government wants to draw down billions of dollars from our Treasury, even before all technical evaluations are completed for the project. We said, quite rightly, “wait for the report”. Until then, AFC is prepared to countersign a post-dated cheque.
This position could not have been better clarified than when AFC Vice Chairman, Mr. Moses Nagamootoo, announced recently in Parliament that “the AFC would not unreasonably hold back the Amaila project; but the party must be guaranteed that the benchmarks have been achieved. A significant player in all of this is the IDB. They are the ones with the technical capability and we have to be guided [by them],”
PPP BULLYISM
Therefore, all this unnecessary anti-AFC propaganda from the Ramotar administration that we are against GPL and Amaila hydro project, is pure nonsense. The AFC will not be bullied over our position that the Amaila project must be supported by the best technical and investment advice, and must be executed in a transparent fashion.
We want to put President Ramotar on notice that we expect transparent procurement processes for all consultancy and contracting services, and full access to all documentations on this Project.
Where is the Procurement Commission? How can the AFC, a party grounded in service to the people, settle for anything less?
CRUX OF THE MATTER
For now, the crux of the matter is that unless GPL is fixed, the Amaila project would be held in limbo. If GPL cannot profitably sell and distribute its own electricity, it would not be able to do so for Amaila. The Government must be honest about this and admit that this State-owned entity has been a punishing financial burden on all householders and taxpayers. GPL’s service is a major contributor to the escalating cost of living. We pay more for less service. We pay for technical losses and commercial theft, as well as for high-cost and incompetent management. We force entrepreneurs to generate their own power, the cost of which is added to everything they produce.
The AFC’s strategy therefore makes sense, that we must replace the outdated and expensive fossil fuel-based technology at GPL for a more comprehensive renewable energy platform, which is good for the economy, energy security, and the environment.
In the short-term, the AFC’s vision includes doing feasibility studies for: (a) a Hydro Power Plant at Tiger Falls to produce electricity for an alumina smelter to revitalize the economy of Linden; (b) an ethanol plant in the Canje Basin to pump 10% Guyanese ethanol in every single motor vehicle fuel tank in the country; (c) a wind farm at Hope Beach and (d) a hydro-power plant, hopefully developed in collaboration with Brazil, to export energy from Guyana to Northern Brazil.
AFC AGENDA
The AFC continues to pursue a robust patriotic and national agenda, aimed at reducing our dependence on imported fossil fuel, reducing the cost of electricity and enhancing the reliability of our electricity supply. We support all meaningful offshore and onshore oil/gas exploration, biofuel ventures, hydro projects, etc.
As a clean energy source, hydropower is a superior national potential that would guarantee our people’s wellbeing. No one should play politics with it.
The PPP’s propaganda that AFC is against the Amaila project is cheap and irresponsible. AFC is NOT against the project. What we are against is borrowing money blindly, without sound feasibility, and spending it improperly. Our conscience will be driven by getting the best value for money for our people.