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Chinese company to commence construction of Amaila Falls Hydro project this year – Govt.
Kaieteur News – Senior Minister in the Office of the President, with responsibility for Finance, Dr. Ashni Singh recently announced that the Chinese contractor, who was granted approval to construct the Amaila Falls Hydropower Project, will commence operations on the mega venture this year.
An artist’s impression of the original iteration of the Amaila Falls Hydro Project
The Minister made the revelation during the presentation of Budget 2022 on Wednesday last.
Dr. Singh told the National Assembly, “Regarding renewable and low carbon energy, our most promising venture continues to be the AFHP (Amaila Falls Hydropower Project) with an expected capacity of 165 MW”.
He informed that government has already requested, received and evaluated proposals for the project and negotiations are in progress with the ‘highest ranked company’ China Railway First Group (CRFG) – the same company that had previously signed a contract to build the said project several years ago.
Vice President, Bharrat Jagdeo in November of last year, during a press engagement, told reporters that a decision had been taken by Cabinet that government would be approaching the selected contractor to negotiate on the way forward.
The Ministry of Finance, in a subsequent public missive corroborated the Vice President’s assertions saying, that Cabinet had given its ‘No Objection’ to the company, as evaluated by the National Procurement and Tender Administration Board (NPTAB).
In this regard, the AFHP will be developed under a ‘build-own, operate-transfer (BOOT) arrangement where the developer would operate the project for a 20-year period before handing it over to the government, at no cost.
The Finance Minister explained, “The project will be developed under a build-own operate-transfer (BOOT) arrangement within which the Guyana Power and Light Incorporated (GPL) will purchase power from the operator under a Power Purchase Agreement (PPA). We anticipate that construction will begin in 2022 and be completed by 2027. Once operationalised, the facility will reduce the cost of energy significantly for both businesses and households.”
This year, the PPP administration has set aside some $29.4 billion to the energy sector, which it says will advance the transition to cleaner sources of energy. To this end, $20.8 billion will be channelled to the Gas-to-Energy project, while other investments will be made for solar farms in Berbice, Essequibo and Linden.
In explaining the reason for selecting the BOOT model for the Amaila Falls Project, Jagdeo was adamant that in such a situation, government would bear none of the risks financial or otherwise and that the project would be repaid for through the Power Purchase Agreement (PPA) that would have to be signed with the Guyana Power and Light Inc .(GPL).
The Vice President told reporters, “…we have a really great bid” and explained that in this iteration of the Amaila Falls Hydro Electric Project (AFHEP), “we are not going to put any money into the project, we are just buying power.”
According to Jagdeo however, this time around, it is expected that the project would be cheaper as a result of lower interest rates but even ahead of negotiations with the contractor.
As such, he said the administration is looking to generate power at some US$0.07 (cents) per kilo watt hour (KWH).
He speculated that with GPL purchasing power at that price, “we can still sell power at 15 cents per KWH, which we are hoping to do because now it’s 30 cents, and still make a good profit for GPL…we are very pleased that the bids came in and we have these offers now and the project is going to move forward.”
According to the ministry, a total of four companies submitted proposals, and China Railway Group Limited was identified as the most ‘capable partner’ by the Evaluation Committee after a rigorous evaluation process, following which NPTAB submitted the relevant recommendation to Cabinet for ‘no objection.’
It should be noted that checks conducted by this publication found that China Railway was in 2019 debarred by the World Bank for practices considered fraudulent on a highway project in the country of Georgia.
China Railway was established in 1950 and is a subsidiary of China Railway Engineering Group (CREG).
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