The gas-to-shore and Amaila projects should be placed in quarantine

Nov 08, 2021 Features / Columnists, Peeping Tom

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Kaieteur News- The average cost of electricity in Trinidad and Tobago, delivered to consumers, is US$0.05 cents per kilowatt hour. Why then would Guyana be spending billions of US dollars to produce electricity at a cost of US$0.07 per kilowatt hour and then to deliver this same electricity at double that cost to its consumers.
The average cost of delivered electricity in Guyana is approximately US$0.32 cents. But even with the halving of this price, Guyana will not become competitive with Trinidad and Tobago which is not known for its efficient generation of power.
The relatively high cost of the generation of electricity is one of the reasons why Guyana should not be pursuing the gas-to-shore project or the Amaila Falls Hydroelectric Project. Neither of these two projects, as conceived by the PPP/C, is going to provide Guyana with a competitive cost of electricity.
Speaking at a Diaspora Conference in May of this year, President Irfaan Ali indicated that Guyana is looking towards the establishment of an energy corridor linking Guyana, Brazil and Suriname. French Guiana has also hinted at being part of such a facility. It is reported that the energy corridor would see the countries collaborating to share power, based on their needs and ability to supply.
The idea of Guyana becoming an exporter of energy is a pipe dream. Who is going to buy energy from Guyana at a cost of more than US$ 0.30 per kilowatt hour for imported energy? Brazil, Suriname and French Guiana are quite capable of generating their own power at a lower or comparable cost.
More than 35 years ago, the PNC was on a similar wild excursion with its Upper Mazaruni Hydroelectric Project. The propaganda which was spewed by the PNC still have Guyanese believing that Venezuela’s blocking of loans from the World Bank killed the project. The facts however are much different. The cost of the 3,000 MW UMHP was grossly underestimated and it relied upon selling electricity to, of all places, Venezuela since Guyana did not have the capacity to utilise that power.
The PPP/C government however will not have the same problems with accessing financing for its Amaila Falls Hydroelectric Facility and the gas-to-shore project. All two projects, presently in the pipeline, are going to be financed by private investors. The profits to these investors are going to be unwritten by a Power Purchase Agreement with the Guyana Power and Light Inc. (GPL).
The cost which GPL will have to pay the developers will have to be borne by consumers. In other words, it is you and me who will be saddled with ensuring that these developers make their financial killings. In March of this year, President Irfaan Ali told a Guyana Basin Conference that Guyana was going to become an industrial powerhouse. But with only a projected halving of the cost of energy as a result of the gas-to shore and the Amaila Falls Hydroelectric Project, this too is another pipe dream.

The second draft of the National Competiveness Strategy, which was collaboration between the Government of Guyana and the Private Sector Commission, had identified the high cost of energy as a major bottleneck towards increased competitiveness. That report stated, “The cost and reliability of electricity is also recognised by Government as a major constraint for profitability and smooth business operations, especially in energy intensive industries such as mining and manufacturing.”
One year ago, the World Bank reminded us that energy costs in Guyana are among the highest in the world. Yet, it appears that the government lacks the ambition to do better than the US$0.15 per kilowatt hour which will not allow the economy to become competitive.
And local private sector organisations are mum on this question. Thus far, both the Private Sector Commission and the Guyana Manufacturers and Services Association have not made any adverse comment about the estimated cost of power from Amaila and from the gas-to-shore project, even though the final cost to their stakeholders is likely to be more than three times that which is paid by consumers in Trinidad and Tobago.
The gas-to-shore project and the Amaila Falls Hydroelectric Project must be placed in quarantine. The public must demand that these projects be re-conceptualised or halted all together because they will end up delivering high-cost energy to consumers and will do very little to improve Guyana’s competitiveness.
Jagdeo and company must not be allowed to proceed with these projects which will benefit investors at the expense of consumers. But even more importantly, these projects are part of the selling of pipe dreams which can end up bankrupting the country. So far Jagdeo has not stated whether the government will guarantee a fixed rate of return for the investors.
Instead, of Guyana becoming an industrial powerhouse – as the President likes to tout – the PPP/C will turn the country into an industrial graveyard. Just as the Upper Mazaruni Hydroelectric Project almost did 36 years ago.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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