GPL Fuel savings from Amaila would have been spent servicing its debt - Chris Ram

GPL Fuel savings from Amaila would have been spent servicing its debt – Chris Ram

Sep 03, 2013 News

“…a higher, or lower, level of dishonesty by Brassington is hard to imagine”

The savings that would have been made by the Guyana Power and Light by not having to buy fuel to generate electricity would have been spent on the prohibitively high debt servicing for the Amaila Falls Hydro Electric Project.
This is the position held by Christopher Ram who said that Guyana’s lead negotiator on the project, Winston Brassington was being dishonest on the matter.

Christopher Ram

Brassington this past week had said that Ram admits that there will be savings on fuel but “that these will only kick in after 12 years.”
Ram described the position by Brassington by saying “a higher, or lower, level of dishonesty is hard to imagine.”
In seeking to clarify the pronouncement, Ram has since reiterated that it is true that there will be savings on fuel but what is being ignored is that for 12 years following Amaila’s coming into operation, the entire savings will be spent on the prohibitively high debt service to Sithe Global.
Sithe Global had been guaranteed a return rate of 19 per cent, China Development Bank 8.5 per cent and the IDB, according to Ram, 9.35 per cent.
Brassington had also accused Ram of mixing up the Guyana Power and Light’s cost of generation and selling price.
According to Ram, this position held by Brassington, is “shamelessly false.”
According to the Financial Analyst “If the truth be told, when I asked Brassington and his team about the 40 per cent tariff reduction which the President, Robeson Benn and Irfaan Ally had been boasting about, they responded with wry smiles that those persons were confusing the two issues of generation cost by Amaila and tariffs by GPL.”
Ram said when he asked about statement made by a Government Minister that the International Monetary Fund (IMF) had pronounced favourably on Amaila, “the response was, do you really expect us to answer that?”
Ram this past week had suggested that Brassington is embarrassed by the revelation of the amateurism he and his team displayed in negotiations with Sithe Global.
Kaieteur News had reported this week that the Confidential Project Document, which had to be leaked to this publication, has revealed that the money to be expended for the hydro project is in excess of US1B, as against the US858M that government had been touting.
That document revealed that while the government had said it would only be putting US$100M to the project, it had in fact committed US$157M to the hydro project.
That document also revealed that the Guyana Power and Light Company would have had to deposit in an ‘Amaila Debt Reserve Account,’ US$36M in order to ensure payments to Amaila.
The power company, in order to prepare for the electricity from Amaila, would also have had to spend more than US$90M in capital works, in order to be ‘hydro-ready’
It was also reported that among the many questionable arrangements Guyana signed onto was the fact that Sithe Global would have been paid a 19 per cent interest rate on its US$157M for the entire period, despite the fact that over the years it would have been receiving payments on the principal amount.
Ram had said that the transaction was akin to depositing $100,000 in a bank, withdrawing $90,000 but the bank continues to pay interest for the original deposit.
This he said would have increased the amount of money to be repaid for the overall project.
Sithe Global had also demanded an equity participation fee which would have seen the company earning an additional US$17M.
Sithe Global was also going to be paying itself US$60,000 monthly to oversee the construction of the project that it had designed, thereby inflating the cost of the project and its subsequent repayments even more.