Contractor, Brassington confirms increased price tag for Amaila Hydro…

Aug 01, 2013 News

---

 

 

…no final shareholder agreement, Power Purchase Agreement or Licence

…Govt. looks to guarantee GPL repayments, not loan

… Ram maintains tariff will increase by 23.6 per cent

…only 142MW to reach National Grid

Sithe Global’s President, Brian Kubeck, along with Technical Director for the Amaila Falls Hydro Electric Project, Winston Brassington, yesterday confirmed that the price tag has increased to US$858M.
This is US$18M more than the figure quoted last week by a number of government officials including President Donald Ramotar.
A high level team from Sithe Global, along with Brassington, yesterday met with stakeholders at the Guyana International Conference Centre (GICC) where this confirmation was made.

This was the second stakeholder consultation on the controversial subject within a week and this time around, the media was given preference in relation to clarifications on the ongoing project.
Among the details that emerged during the course of the project is the fact that the Inter American Development Bank (IDB) and the China Exim Bank will not be lending money to Guyana but rather to the Amaila Falls Hydro Power Inc (AFHI), the Special Purpose Company created for the Hydro Power facility.
It was pointed out that Sithe Global owns 60 per cent of the company for its US$157M it will be investing and Guyana will own 40 per cent for the “more than US$100M” the government has committed as part of its share in the project.
Brassington told the audience that Guyana’s share for the project has increased from the initial US$100M.
It was further revealed during the latest in the presentations on the project that the Government, through the raising of the debt ceiling, will not be providing a guarantee for the loans being incurred.
According to Kubeck, the loans were negotiated for by AFHI, the company owned by Government and Sithe Global, but given that government is a minority shareholder it is considered a private company.
The officials explained that the loans being borrowed for the project, namely from China and the IDB are being borrowed by this Special Purpose Company and not the Guyana Government.
What the government is guaranteeing is the performance of Guyana Power and Light (GPL) to make its payments to AHFI, which will in turn make payments to Sithe Global, after clearing additional expenses.
The frank consultation also revealed that there is currently no binding shareholder agreement, Power Purchase Agreement (PPA) or Final Licence for the development of the Hydro Power Plant.
Brassington said that these are all currently at a draft stage.
Sithe Global is looking to build the Hydro Power plant to generate 165MW of electricity but this is not the amount of electricity that will be delivered to the Sophia Substation to be placed onto the national grid.
According to Kubeck, some 23MW will be lost along the transmission line as the electricity makes its way to and from the plant to the Sophia Substation.

He said that just about 142MW will actually reach the substation.
According to Brassington the power company will be looking to take just over 1,050 giga hours, annually from the Amaila Falls Hydro Electric Plant.
He said that currently, the national grid accounts for more than 700 giga hours of electricity.
Linden which will be coming on stream with Amaila, will account for an additional 70 giga hours while they are expecting the more than 600 self generators including large scale ones such as Banks DIH and DDL onto the grid, thereby utilizing the majority of the electricity provided from Amaila.
Asked to justify the assumption that the self generators would be coming back onto the grid, Brassington spoke to lower electricity tariff among other factors that will allow them to choose to.
He later indicated that Government would be removing all incentives such as waivers on the importation of fuel for self generators.
At least one private sector observer, who was querying the benefits of opting back onto the grid, said that this was tantamount to forcing the self generators back onto the national grid.
Senior Managing Director of the Sithe Global parent company, the Blackstone Group, Sean Klimzack, who also addressed yesterday’s consultation, said that to date Sithe Global has already expended some US$16M over the past six years developing the project.
“The decision time for Amaila is now….what we are asking for is a unified consensus view from parliament,” said Klimzack
Brassington who provided an overview of the project told those gathered that there would be an annual saving of US$200M.
This position was vehemently challenged by Eminent Chartered Accountant, Christopher Ram, who pointed to the fact that based on the 2012 audited statements, the GPL Company’s generation cost was some US$120M.
Brassington said that the figures used by Ram speak to the more than 700 giga hours of electricity generated for the national grid.
He said that where the US$200M projection comes in, is based on the fact that the power company would be looking to take some 1,050 giga hours from Amaila at a cost of between US110 and US120M annually.
He said that were GPL to generate the 1,050 giga hours of electricity using fossil fuel, it would cost exceedingly more.
Asked about the amount of money GPL would have to rake in, in order to make its payments for Amaila, as well as keep the regular generation on stream, along with maintenance and administrative costs, Brassington said that this would be provided at a later date.
Further the consultation also revealed that the tariff for electricity will not be reduced by 40 per cent as had been indicated by Prime Minister Samuel Hinds and Head of State Donald Ramotar.
Brassington said that the tariff will be reduced by 20 per cent and what will be reduced by 40 per cent, is that of the generation costs.
The tariff decrease was however challenged by Chris Ram who said that based on his calculations it would in fact be increased by 23.6 per cent.
Brassington subsequently agreed to meet with Ram for the two to go over the figures and come to a consensus on what the actual final tariff will be.
 

 

---

---