Govt. now eyes Chinese funding for Amaila hydro

Jan 30, 2014 News

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– Sithe Global not fully out

By Leonard Gildarie

The 165-megawatt Amaila Falls hydro project remains very much alive with Government not ruling out asking China for additional backings.
The disclosures were made yesterday by Government during a presentation by the Guyana Power and Light Inc. (GPL) to Parliament’s Sectoral Committee on Natural Resources.

The US$840M-plus project was left hanging in limbo last August after the US developer, Sithe Global, announced its pullout. This was because the National Assembly remained split on key legislations that were critical for partial project financing by the Inter-American Development Bank (IDB). The Opposition had been unconvinced on how the monies would have been spent, among other things.
Sithe Global made it clear, then, that the flagship project, which it would manage for 20 years before handing it over to Government, needed the full backings of the National Assembly.
Since then, Government has remained largely quiet on the project’s future, the country’s biggest infrastructural development in terms of costs, only saying that they were exploring a number of options.
Yesterday, Government’s point man on the project, Winston Brassington, based on questions from the Opposition’s Members of Parliament (MPs), disclosed that Government had started looking at a number of options after Sithe Global’s pullout, recognizing that the parties involved had spent considerable time and monies in developing it.
The contractor, China Railway First Group, remains “keenly committed” to the project. So does China Development Bank, the official said.
Brassington, the current Chairman of GPL, made it clear that China is willing to step in and “fill the gap” with regards to financing.
Under the financing structure, in the original arrangement, Sithe Global would have been putting in US$152M; IDB US$175M, Guyana US$100M and CDB US$413M.
China Rail had already signed an Engineering, Procurement and Construction (EPC) agreement with Sithe for US$506M. Some 70 per cent of the total funding would have been coming from the CDB and the IDB.
Brassington, however, stressed yesterday that talks are still ongoing with the partners with any negotiations still at a preliminary stage. Before the end of this first quarter, Government would be in a better position to know the next step.
The official is not ruling out Sithe Global returning to the picture. Rather, the options on the table are a Chinese-led project or the possibilities of the existing partners being returned.
While not naming them, Brassington said that a number of other parties have also shown interest in the project.
However, it was recognized yesterday that if Guyana engages a full Chinese-led arrangement, it may run into some problems.
Sithe Global has done significant preparations for the financing and any attempt to revive Amaila may have to entail negotiations with them to possible even buy some of the information. That is in case Sithe Global does not want to be a part of the project anymore.
Yesterday, Joseph Harmon, senior Member of Parliament for A Partnership For National Unity, the largest Opposition faction, insisted that his side remained supportive of hydro electric power but would like to see the IDB feasibility study on the project presented.
This would be a critical starting point in bringing back the project. He also hinted that APNU’s approval would not be far if the IDB feasibility study is positive.
The government would be more than happy for the support of APNU which voted against the Amaila Falls motions last year. Prime Minister Hinds in expressing his optimism for the support said that the Government is continuing to “keep things warm”.
The Chinese angle in the Amaila Falls project would come at a time when the US has reportedly passed new laws which mandate its representatives on key bilateral funding agencies not to support funding for large hydro projects because of environmental and other concerns.
These funding agencies include USAID and World Bank. While IDB is not named, the report said that Guyana is one of the projects that could be affected.
Government yesterday said that it is still assessing the report.
Guyana has had a growing relationship with China with funding for projects including the US$150M expansion to the Cheddi Jagan International Airport and the Skeldon sugar modernization plan which involved a new factory in East Berbice.
Meanwhile, with regards to the access roads to the Amaila Falls site in Region Eight, Brassington said that China Rail which had been given a section is nearing completion with final works expected in March.
Some other sections remained behind schedule with the Ministry of Public Works examining options. However, these are not so critical.
The roads had been a major thorn in the side of the hydro project after it was awarded to Synergy Holdings Inc, whose principal, Makeshwar ‘Fip’ Motilall, was the original mover for the project. The US$15M access roads faced several delays and the contract was terminated in January 2012 by the government.
It was later awarded in parts to several contractors. Some sections again fell behind and Section Seven was later awarded to China Rail, the same contractor who is set to build the hydro dam.
Government has been pushing for the hydro-electric project saying it remains the best option to the huge fuel import bill that Guyana is saddled with to feed its many power station.

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