Latest update November 21st, 2024 1:00 AM
Aug 07, 2013 News
– Sithe Global wants removal of incentives to force self generators onto grid
– Govt. required to maintain access road
The Guyana Power and Light Incorporated (GPL) under the implementation agreement with Sithe Global will be required to revise its tariff in order for the power company to ensure it “derives sufficient revenues during the relevant year to satisfy all of its then, anticipated obligations for such year.”
This means that GPL will each year be empowered to revise its tariffs that it would charge consumers, in order to meet all of its payments to Amaila Falls Hydro Inc., as well as keep its plant up and running, and meet its operational expenses.
In addition, the Government, should it sign on to the agreement, will be prevented from freely privatising GPL in its entirety.
According to the agreement that the two parties have negotiated, the Government will be required to ensure that for the 20 years in which the Amaila Falls Hydro Electric Project is in operation, GPL will have to remain a state-owned enterprise.
Government would need the consent of Sithe Global, if it would wish to privatise more than 49 per cent of the power company during that 20-year period.
The Sithe Global group has further drafted in its implementation agreement, that the Government must maintain a monopoly on the sale of electricity. The power company will be obligated to ensure that the power it receives from the Amaila Falls Hydro Electric Plant, be dispatched to the maximum extent possible, as well as minimise the use of electricity supplied using the traditional mode of generation, namely its thermal plants.
During the recently held public consultation with Sithe Global officials and the Guyana Government, the local technical coordinator for the project, Winston Brassington, indicated that in order to get self generators of electricity such as the Banks DIH and DDL back onto the national grid, it will remove all waivers.
According to the draft implementation agreement negotiated by Government and Sithe Global, this is a move demanded by the latter.
The agreement states that when the Amaila Falls Hydro Electric Plant comes on stream the Government, “shall remove all tax and other fiscal incentives under the laws of Guyana related to generators and fuel and spare parts for generators that are provided to persons in the GPL’s franchise area that are self generators, to encourage such persons to procure electricity supplied by the grid system.”
This obligation, according to the agreement, must be held in place until 80 per cent of the plant capacity is fully utilised.
It is further incumbent on the Government to ensure that all of the necessary laws and regulations are adjusted in order for the GPL to comply with all of the obligations being imposed by Sithe Global and must be done so unconditionally.
Access Road
Another aspect of the implementation of the Amaila Falls Hydro Electric Project placed the obligation on the government to maintain the access road to the plant.
According to the project document, it is the government’s responsibility to have the road designed and built.
This is the access road that was initially handed to Makeswhar ‘Fip’ Motilall, Synergy Holdings Inc at a cost of US$15.8M.
The road has since been revised to cost between US$30M to US$35M, but upon its completion it will be the responsibility of the government to maintain it.
Government will also have to ensure that sections six and seven of the road be provided for the exclusive use of the project.
Under the agreement, the company will also be granted total relief from Corporation, Property, and VAT among other taxes.
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