Sithe Global in breach of interim licence

Jul 28, 2013 News

… should be given the boot – Christopher Ram

Sithe Global Amaila Holdings Inc should be booted out from the Amaila Falls Hydropower Project for failing to meet its licensing conditions, says Christopher Ram, Chartered Accountant.

Chartered Accountant Christopher Ram

According to Ram, the various contracts to execute the hydropower project had not been conducted in accordance with the constitutional and statutory framework of the Constitution and the Procurement Act. As such, the project should be revisited in its entirety.
Ram said that the government cannot enter into any valid contract that is in breach of any law. “No party such as Sithe Global can come into our courts and attempt to enforce such contracts,” he added.
Providing a background to the project Ram said that a study done in June 2002 for the Government was based on the Amaila Falls being developed as a private sector project, on the principle of a Build-Own-Operate-Transfer (BOOT).
Synergy Holdings Inc was granted an Original Interim Licence on July 29, 2002, almost 11 years ago, for the development of a Hydro-electric power station and reservoir and the construction of a transmission to the coast to sell electricity.
Following some extensions, Synergy went to Sithe Global Amaila Holdings Inc., a company incorporated in Cayman Islands, a tax haven, as the proposed investor for the project. By a series of further extensions a Tenth Supplementary to Interim Licence was granted to Amaila Falls Hydro Inc. Apparently for flipping the licence, Makeshwar ‘Fip’ Motilall, Office Manager of Synergy was paid around US$10 million.
According to Ram, perhaps the most important provision of the Tenth Supplementary stated, “Such amendment shall alter only paragraph 5 of the Interim Licence. All other parts, conditions, and provisions of the Original Interim Licence … shall remain in force and effect.”
He said the Interim Licence required the completion of 10 very specific activities to be completed by Amaila Falls Hydro Inc. during the term of the licence to obtain the final licence. And, also sets out what constitutes default. One of these is if the provisions of the Interim Licence are breached.
From all indications the only thing Sithe Global did that was required was to form a Guyana Company. Seemingly, partially completed, is obtaining all environmental and other statutorily permits.
Meanwhile the status is unknown for “finalize and survey all lands to be occupied for construction, maintenance and operation of AFHEP, including the access road and transmission line routes,” he said.
According to Ram, it was announced that Engineering, Procurement and Construction contract was signed with Government undertaking a number of obligations which should have been borne by the company.
Ram, also an Attorney-At-Law, said it appears that financing and pre-closing activities for the development of the hydropower plant are incomplete. “Again, the Government of Guyana has had to undertake a number of financial obligations which should have been borne by the company,” he said.

Minister Robeson Benn and some media operatives on a recent visit of the Amaila Falls Project.

Another requirement for the final licence is the completion of initial developmental works related to the construction of the proposed access road from Pamela Landing to the project site and the airstrip at the project site. This is incomplete and the cost of the road works is being borne by Guyana, he said.
He stated it is unknown if the company collects additional hydrological data on an ongoing basis to verify the levels of firm power during dry seasons.
According to Ram, it is unknown whether the company prepared and submitted to the Minister responsible for energy, Prime Minister Samuel Hinds, a business plan and a framework for an operating and maintenance plan describing the intended approach to operation and maintenance, the proposed operating standards and likely costs.
“It is unlikely that this could have been completed in the absence of the financing being put in place and a Power Purchase Agreement approved by the Public Utilities Commission,” he said. According to Ram, “Sadly, it seems that the company has not only shown complete disregard for the Licence but has asked for the exclusive control of lands well beyond what the Licence provides.”
He believes that the company formed to inherit the Licence from Mr. Motilall, Amaila Falls Hydro Inc. has not met the conditions for the issue to it of a Final Licence.
“But the Government too has been careless in this regard. It has been months since I raised the matter of the Licence with the Prime Minister and I did so again on Thursday. Significantly, he and the rest of the Government team avoided my question. The company was aware of its obligations under the Licence,” Ram said.