The fallout continues on the Amaila Falls hydro

Jul 21, 2013 News

As the fallout continues from Thursday’s non-passage of two Bills critical to the financing of the country’s flagship US$840M Amaila Falls hydro electricity project, attention has been centered mainly on what transpired in the National Assembly.
However, there has been scant regard for the monies spent so far or possible implications, if in the worst case scenario, the players walk away.

Members of the PPP/C side during a press conference after Thursday’s sitting.

Government would have been spending on the access roads leading to Amaila Falls, Region Eight.
Sithe Global, the developer, has also been spending. So too has China Railway First Group, the Chinese contractor, which has also been awarded a contract to complete a section of the access road.
What has been reported so far is that almost US$38.4M ($7.68B) has been committed to contracts for the access roads, which includes 100 km of new roads and 85 km of existing ones. The roads are needed to move equipment to the work site and a pre-requisite to financing.
With regards to Sithe Global, sources of the ruling party indicate that with the contract already signed, should that contractor walk, Guyana could be liable for up to US$30M.
Government, also through its Amaila Hydro Project Inc, the local subsidiary for Sithe Global, has signed a contract with China Railway for US$506M. It is unclear what happens if the year-end deadline is not reached in terms of penalties.

Fresh negotiations
Government has declined to disclose details of repercussions, admitting that should the contract with China Railway lapse beyond this year-end, it will involve fresh renegotiations as that contract is tied to prices of materials and labour. This could effectively drive the US840M price even higher.
On Thursday, two key Bills that Government said are pre-requisites for the Inter-American Development Bank (IDB) were voted down by the Opposition which said that not much clarity on the spending has been forthcoming.
IDB is currently assessing an application for a US$175M loan to the project. Guyana is contributing US$100M while China Development Bank has signaled its intentions to come up with US$413M.
IDB had, according to the administration, given Guyana until July 31, to pass the Bills.
Government has said that the Bills, which pertain to the raising of the country’s debt ceiling from $1B to $150B (US$750M) and the creation of a reserve area in Region Eight to counter the impacts of the hydro facility, could still meet the July 31 deadline, if the Opposition agrees.

PM Hinds, APNU’s Leader, David Granger and Deputy Dr. Rupert Roopnaraine on Friday night in deep discussion.

Under the rules of the National Assembly, the highest law making body of the land, a Bill that has been debated and voted on cannot be laid for consideration again until the next session. The National Assembly is set to go on a two-month recess starting in August and returning in October, the same month that the IDB Board has to meet and consider the loan. With documents from Guyana to be submitted way before, the non-passage of the two bills have “greatly wounded” the hydro project, Energy Minister, Prime Minister Sam Hinds said Thursday night.
During the sitting, the Opposition demanded that it wanted Government to pass four bills that paved the way for long-overdue elections to be held, before it lent support to the legislations for the hydro.

Sabotage
Government has accused the Opposition of sabotaging the project with its vote with President Donald Ramotar saying Friday that it is now in jeopardy. He also described the downing of the bills as akin to terrorist acts.
Seven-seat Alliance For Change, which together with A Partnership For National Unity (APNU) has a slim one-seat voting advantage over the ruling party in the National Assembly, has denied that the hike in the debt ceiling is a requirement of the IDB. The party said it learnt this following a meeting with the bank’s regional head earlier this week.
APNU, in defending the coalition’s decision to vote against the two bills, said it does not want the 165 megawatt hydro facility to end up like the troubled US$200M Skeldon Factory which is still facing technical issues more than three years after being commissioned.
Government, on Thursday night, accused the Opposition of sabotage saying that it has been meeting regularly and providing answers on the project. There were no indications from the Opposition at any point in time that the local government reforms would be tied to the passage of the hydro Bills.
Government also said that the voting down of the bills would send the wrong signals to international investors who are eyeing Guyana. It would also rob Guyana of a chance of getting cheaper electricity.
It also has eroded the trust between political parties, the PPP said.
The business community has issued statements calling for the National Assembly to resolve the issues and move to have the hydro built as it is badly needed in the country.