New BOOT arrangement for Amaila must be cheaper - Energy Technologist

New BOOT arrangement for Amaila must be cheaper – Energy Technologist

Jul 13, 2022 News

Kaieteur News – Vice President Bharrat Jagdeo is determined to pursue the Amaila Hydropower project via a Build Own Operate and Transfer (BOOT) model, in which Guyana will not be standing expenses for the venture upfront, but will purchase power through an agreement and take ownership after 20 years.

Energy Technologist, Alfred Bhulai

However, Energy Technologist, Mr. Alfred Bhulai has signaled that any new arrangement must be cheaper in order to benefit the Guyanese people. According to Bhulai, “Amaila, based on the calculations I have done so far is the most expensive energy option that we have and will turn out to be more expensive than what they plan to pay now. It’s a bad deal so Mr. Jagdeo is very ill-advised and I don’t know for what reason he is pursuing this thing but it doesn’t make any sense on a costing model.”

He was keen to restate his position that solar remains the best renewable energy option, citing that this alternative would be best if pursued on a larger scale. Bhulai pointed out that he is not against the Amaila Hydropower project, explaining that if the agreement comes in at a cheaper price, it could beneficial. “If it were cheaper, certainly it could be to the benefit of the people but no way would it be sustainable at the current price,” he said.

When he was asked to weigh in on the model being pursued and whether he believes Guyana could get more value out of an Engineering, Procurement and Construction (EPC) contract, Bhulai pointed out that this could be so, if government secures a proper warranty. He reasoned, “Why he wants a Build Own Operate and Transfer contract is because he doesn’t know how to check on anything. We don’t have the expertise to keep checking on those things and we might end up paying for something we don’t know about so the country would be undertaking that responsibility…suppose the Chinese do it and they fail to construct it properly and they hand it over to us, will we take China to Court? So that is why we would want a BOOT for the operators to handle the liabilities…the terrain there is terrible so to get sufficient qualified people to get there and operate it, it could cost us a lot of money that is why he is hoping the Chinese would do it.”

On Monday, Vice President Bharrat Jagdeo related that negotiations with China Railway First Group have been terminated, with the Government of Guyana shifting its focus on the Gas to Energy project.

Jagdeo, at the sidelines of the National Toshaos Council (NTC) Conference related, “We have to go back to the drawing board and then possibly retender at some point in time at the future.” Notably, the VP said that the administration is fixed on securing another BOOT arrangement.

When he was pressed to say how soon government plans to invite proposals for the Amaila project, Jagdeo said it was too early to say since, “We have been busy trying to move forward the Gas to Energy project as you can see. The President made some announcements recently, so now that we have gone out to Tender, we are expecting bids to come in by September.”

By the end of next month, he said that proposals would already be in for a Project Manager to oversee the venture. Jagdeo explained that he is still hopeful that the country’s targets to cut emissions by 70 percent by 2030 would still be achieved, as the Amaila project formed part of the agenda to meet the climate change objectives.

During the Conference of the Parties (COP26) of the UN Framework Convention on Climate Change (UNFCCC) hosted last year, President Irfaan Ali committed to reducing the country’s carbon footprint through a progressively cleaner energy mix, aimed at reducing carbon emissions by 70 percent in the energy sector by 2030.

The Amaila Falls project was planned to generate some 165 Megawatts of electricity to the national grid. China Railway had already been awarded the contract through the National Procurement and tender Administration Board (NPTAB), however the contractor had as late as April 22, last, written to the government “saying that they are having a hard time doing the BOOT contract and they want to shift to an EPC plus finance” option instead.

The Chinese bid, he said, had committed to 7.7 Kwh. The project was estimated to cost some US$750 million, which would have been repaid to the contractor over the 20 years period that the country would have been buying power.