GPL liable when Amaila Falls runs dry — Winston Brassington

Feb 22, 2022 News

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Kaieteur News – The Guyana Power and Light Incorporated (GPL) in addition to agreeing to purchase all of the power to be delivered to Georgetown from the 156 megawatt (MW) Amaila Falls Hydro Electric Plant has also agreed to assume the hydrological risks involved in the project.

As such, it would mean that GPL would bear the incurred liability whenever the Amaila Falls runs dry or if the 23 square kilometres reservoir is unable to feed the hydro plant.
This is according to Project Head, Winston Brassington, when he provided an update on the project for stakeholders at the recently concluded Energy Conference and Expo, venued at the Marriott Hotel in Kingston.
Addressing the conference, Brassington told those in attendance, “like any large projects there is a lot of risk in these projects but most of these risk have been put to the developer.”
He did note however, that when it comes to the geotechnical risk “we are going to stay with the same structure we had in 2012; the hydrology risks GPL will be assuming this, the contract provide for allocation of force majeure risk” and that GPL will take all of the power from the project.
Hydrological risk is generally seen, as the risk of having insufficient water in the source river or dam to support the expected levels of electricity generation as had been the case in the past with the Amaila Falls which runs dry during the course of the year.
As such, it would mean that in the event the falls runs dry during the course of its hydro plant’s operation, GPL will have to assume all of the risk involved.
As it relates to the force majeure, this too will be borne by the government of Guyana in the event of something caused by the state, or in the event of natural causes would be borne by both parties.
Government, he said, would only be guaranteeing the performance of GPL.
According to Brassington, the new iteration of the 165MW project will be coming in cheaper than its 2012 price tag, when the then project developers—the Blackstone Group—walked away from.
At the time, the reported price was pegged at in excess of US$1B but, according to Brassington, this time around, the project is earmarked to cost some US$700M.
The financing for the project this time, according to Brassington, will be borne by the contractor – China Railway First Group, and will include the installation of some 270 kilometres which he said would run from the Amaila Falls to the Sophia Substation.
Included in the new project scope, according to Brassington, is the upgrade of the Amaila Falls Access Road, two substations—one in Linden and another in Georgetown.
Insisting that Guyana has not made any other financial commitments to the project, other than to pay for power when it arrives in Georgetown, Brassington said that the Chinese contractor is expected to put in the finances in part from Chinese institutions.
Being pursued under a Build Own Operate Transfer (BOOT) model, Brassington related that the contractor will have to establish a Special Purpose Vehicle (SPV) in which the owner—China Railway—will assume all of the debts and equity and that power will be purchased by the Guyana Power and Light Inc. (GPL).
“GPL will buy all of the power under a PPA (Power Purchase Agreement),” and the contractor will have to assume the majority of the risks in the project, he said.
According to Brassington, all of those that had submitted proposals with the intention of pursuing the project had been given copies of every bit of information and documentation at the government’s disposal.
These include, according to Brassington, all of the feasibility and other studies undertaken in relation to the project such as hydrology surveys and others.
Under the BOOT arrangement, Brassington said Guyana would, in 20 years’ time, take over ownership of the project.
He did, during his presentation, seek to point out that during the three-and-a-half-year period expected for construction, an independent supervision firm would be hired by the administration to ensure the hydroelectric plant is built to specifications. This is in addition to the recruitment of an Operations and Management consultant. With Guyana taking ownership of the project 20 years after commissioning, Brassington noted that the project’s average price measured over that time period would be about 7.7 cents which is largely going towards the repayment of the US$700M financing.
According to Brassington, the project will be funded by China Rail and Chinese institutions. They will own the project and it will be operated under a concession for 20 years.
At end of the 20 years, he said, it will be handed over to government at no cost and as such “I think this a great project.”

 

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