The AFHP belongs in a funeral parlour

Mar 02, 2022 Features / Columnists, Peeping Tom

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Kaieteur News- The resuscitation of the Amaila Falls Hydroelectric Project (AFHP) is an attempt to soothe the bruised ego of the PPP/C following the decision of the developer of the project to walk away. It is also a Jagdeo legacy project which he is determined, against all reasoning to the contrary, to establish.
Prior to 2014, the then Opposition, APNU and AFC, refused to support the project. At the time, the combined parliamentary Opposition parties held a slim one-seat majority. Following their non-support for the project, the developer considered going ahead as risky and so they rightfully walked.
If the PPP/C had been in a similar position as the APNU and AFC it would have found some excuse to not support the project. Why would the Opposition parties, with a one-seat majority in the National Assembly, support a project, which would become the PPP/C’s re-election ticket?
Notwithstanding this element of realpolitik, there were and remains serious concerns about the AFHP. Those concerns have not been addressed satisfactorily.
The APNU+AFC had concerns about the hydrology of the project. These concerns have not been appeased. But there were also other concerns relating to the cost of electricity, the financial risks and the conditions being imposed on GPL and the government.
The PPP/C’s dubious decision to grant a contractor the contract to build a major access road to the project site mired the entire project in controversy from which it never recovered.
As part of the financial model, Guyana was required to deposit equity into the project. As such, the PPP/C approached Norway for the injection of this equity. In 2014, Norway deposited US$80M into the IDB for this purpose.
After the PPP/C lost office in May 2015, the APNU+AFC agreed with the Government of Norway to have an objective and fact-based assessment of the project. That review was undertaken by Norconsult in 2016.
The review was, overall, favourably disposed towards the project. But this was only because of the absence of other feasible alternatives to allow Guyana to meet its 100 percent emissions-free target by 2025.
The APNU+AFC had made this pledge as part of its nationally determined contributions to the Paris Agreement. All countries to the Paris Agreement are required to state what they intend to do to reduce emissions. Norconsult found that given this commitment – hydropower was the only realistic path towards an emission free electricity sector – the fastest way to do this would be to maintain the AFHP.
The PPP/C has scaled down this pledge and now only plans to have 70 percent of its electricity generated from renewable energy. In this context would the AFHP be the quickest way to achieve that target?
Not so, considering that for a mere US$100M, Barbados is constructing a 178-Megawatt hydrogen and solar power station. The AFHP will cost US$700M and generate less power than the Barbados hybrid system.
Norconsult did not give a blanket approval for the AFHP. It said that in the context of Guyana’s ambitions under the Paris Agreement, the quickest way to achieve these ambitions was through the AFHP since it was, at that time, the only project with a “full feasibility study completed. It has a higher plant load factor than the alternatives, has a smaller reservoir and a levelised unit cost in the same range as the most attractive alternatives.”
Norconsult, however, had some of the same reservations as the APNU+AFC relative to the hydrology of the project. Norconsult found data inadequacies in relation to the flow of water to the site. This is what the report said, “The hydrology for Amaila Falls Hydropower Project is not very well established since continuous series of direct flow measurements in Kuribrong River at the project site do not exist.”
Yes, “do not exist”! The PPP/C is therefore asking this country to take a major gamble.
The study also found that the need to run 270-280 km of power lines from the project site to the power grid in Georgetown, increased construction costs by 40 percent. Yes, 40 percent!
According to Norconsult, this explains the high cost of the energy, which the project will be selling to the Guyana Power and Light Inc. These two aspects alone –the high cost associated with the transmission lines and the cost of the electricity – should have caused the PPP/C to reconsider the economic viability of the project.
At the time of the Norconsult study, there were not many alternatives. And to its discredit, the APNU+AFC had no major power project – renewable or non-renewable – other than the gas-to-shore project.
However, since 2016, the price of solar power and the time it takes to establish solar power farms have been slashed considerably. A viable alternative to the AFHP therefore exists.
It is solar power. It is estimated that a 250MW plant would cost on average US$250M as compared with the almost US$700M cost for the AFHP.
The power lines added 40 percent to the estimated construction costs of the AFHP. With a solar power plant, there would be no need for such a high burden and therefore the cost of the electricity sold to the GPL and consequently to consumers would be far cheaper than the AFHP.
The AFHP if undertaken is going to sink Guyana. It will become another Skeldon Sugar Factory – the monster of all behemoths.
(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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