Cost of Amaila Falls Hydropower Project – understand and stop fighting one another

Nov 25, 2021 Letters

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Dear Editor,

Kaieteur News – The government recently paid for full-colour, double-page spreads in the daily newspapers touting the Amaila Falls Hydropower Project (AFHP) for powering Guyana’s future. The topmost justification is the Norconsult 2016 report on AFHP, which states, “The only realistic path for Guyana toward an emission free electricity sector is by developing its hydropower potential. The fastest way forward is to maintain AFHP as the first major step for substituting its current oil-fired generation.”
While this was debatable in 2016, it is no longer the case. Solar power has overtaken it. I compared the costs and conveniences of solar power, the gas-to-energy project, AFHP and GPL in a recent article, https://www.stabroeknews.com/2021/11/01/features/in-the-diaspora/the-solar-alternative-for-guyana/. In fact, AFHP with a price tag of US$900M (we are hearing about US$1B now) for 165 MW worked out at 38 US cents per kWh unit of electricity, which is more than the 17 US cents for gas-to-energy, the 25 cents for GPL residential rates, and far more than the two cents for solar. Operation and maintenance costs were not considered.
Since then, it has been revealed to the public, without any documentary study detail, that China Railway Group Limited will build, own, operate and transfer (BOOT) the AFHP at no cost to Guyana except for 7.737 US cents per kWh that GPL will pay for 20 years. This means that if we get the full 165 MW power from AFHP over the 20 years, we should receive 29 TWh (Terawatthours) of electrical energy, for which GPL will have to pay US$2.24B. In order to access this energy, GPL will obviously have to set up a transmission and distribution (T&D) system. Based on the generation to T&D ratio of costs for a US$2.2M contract for the design, supply and installation of a 150 kW hydropower plant on the Chiung River, at Kato Village, in Region Eight signed by the APNU/AFC government in September 2019, the T&D would cost GPL an additional US$3.8B (not the few hundred million US dollars, which they seem to be considering) amounting to US$6B for 165 MW of power.
This works out to 21 US cents per kWh, more expensive than the 15 cents, which the Government is telling us that we will have to pay, but far less than the 38 cents, which I worked out before this new revelation was booted up. 38 – 21 = 17 US cents per kWh is a huge difference, but it is not my job to account for it by guessing how the Government is playing with our future. The onus is on the Government to provide the information requested by citizens, who without knowing the financing conditions (and other concessions?) have to make assumptions about interest rate and payback period. Let the Government publicly reveal the conditions of financing. We have good cause to ask our respective governments. The Burnham-Hoyte governments, foisted upon us by rigged elections, also foisted a backlog of 10 years of audit on us. The Omai Gold Mines Ltd. was able to declare no profits, while governments had no audit on how much gold was being produced, just like the oil companies are getting away today with unaudited project costs and their-at-first-secret production sharing agreement, which our governments and oil companies say is not supposed to be renegotiated.
We were told that the Skeldon Sugar Modernisation Project (SSMP) was a turnkey affair, yet the economies of scale could eventually not be achieved by the improved technology. It was a good idea, but the young Mr. Jagdeo did not comprehend what was required, and it did not help that successive Ministers of Agriculture kept me, a very qualified sugar technologist, out of it. Now the country has to pay back the US$200M to China for the SSMP. This might explain the many concessions to Chinese companies, and why, e.g., the current Minister of Agriculture unilaterally increased the number of Seabob fishing trawlers contrary to the (International) Maritime Stewardship Council certification limiting the number of trawlers.
The most obvious reason for the lack of audits is that there is grand corruption to hide. How else to explain the US$92M discrepancy between what ExxonMobil declared to its shareholders and what was presented to us as pre-contract costs? This is why this and other audits of even more massive sums are imperative. This is why the calculations behind the revelation of the US$0.07737 price of AFHP electrical energy per kWh must be shown. It has four significant figures, so that degree of accuracy must be seen!
The next question is performance. If a contractor defaults, the government should implement the contractual remedies. But what if the contract is comparable in cost to the country’s budget or even greater, as some of these big contracts are? Are the terms of such contracts available to be inspected by the public before being signed away? Can we insist on performance of the Chinese and American companies performing large contracts, like how the President recently told off local contractors at the ACCC? What remedy is there for default? Or do we fancy we can get remedies and damages by courts in the USA and China?
Vehicles often park (illegally in municipal markets) near to roadside stalls for shopping at the drivers’ convenience. I once observed two porters fighting one another to pass between the narrow gap between a large vehicle (polluting the air with the engine running to maintain its air conditioning) at the Bourda Market stall in front of which it was parked. This is my parable of the elephant in the room. The drivers are the exploiters. They park with neither consideration nor tax to get what they want in the easiest way they can. Their vehicles carry away the goods after polluting the environment. The vendors are our politicians, their families and friends, hustling to serve the exploiters, oblivious sometimes to the traffic jam they are creating, so long as they can get the sale. Most pitiful of all are the porters who represent the Guyanese people fighting one another to make ends meet in a cost-of-living space narrowed by government employers and foreign exploiters. Let us therefore stop fighting one another and together tackle the collusion of governments and exploiters against us.

Alfred Bhulai

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