Jagdeo’s jitters!

Oct 24, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – Guyana, a country striving to secure a reliable energy supply, has found itself at the crossroads of a critical debate regarding long-term power purchase agreements. The central figure in this discussion is none other than Vice President Bharrat Jagdeo, whose actions and statements have sparked suspicion and ridicule.

According to yesterday’s edition of the Guyana Times newspaper, he is reported to have told the country’s diplomats that the government is cautious about entering into long-term purchase agreements to address the country’s electricity woes. He reportedly made the remarks at a conference being held for Heads and Officers-in- Charge of Guyana’s overseas Missions.

First and foremost, it is necessary to establish the scope of Vice President Jagdeo’s authority on energy matters. Traditionally, the energy portfolio falls under the purview of the Prime Minister. However, Jagdeo has made it a habit to express his views on virtually every facet of the government’s operations. His widespread involvement raises questions about his knowledge and competency on these diverse topics and, specifically whether he should be pronouncing on matters relating to the energy sector.

Secondly, it is a surprising position that has been adopted by the government. After all, the original model of Jagdeo’s Amaila Falls Hydroelectric Facility envisaged a long-term power purchase agreement between the developer and the electricity company. It therefore needs to be questioned why is cautious about entering into long-term power purchase agreement.

Is the government now averse to long-term power purchase agreements in the energy sector? These agreements provide a level of assurance to power providers, enabling them to invest in energy generation with confidence. Jagdeo’s skepticism about such agreements raises several critical questions. Will such long-term agreements not be necessary to address Guyana’s alleged electricity shortfall, and who will invest in energy generation without long-term commitments?

Economics 101 teaches us that investors need stability and certainty to justify large capital expenditures in power generation. Without these assurances, attracting the necessary capital and expertise becomes an insurmountable challenge. Therefore, Jagdeo’s stance appears perplexing.

One cannot help but wonder about the underlying motivations behind Jagdeo’s present opposition to long-term power purchase agreements. His government is currently pursuing a gas-to-energy plant project aimed at reducing electricity tariffs by 50%. Is he apprehensive that alternative energy proposals might emerge, providing cleaner energy at a lower cost than the gas-to-energy plant?

Is the prospect that potential developers may submit proposals that would come in at a lower energy price and at a cheaper capital cost than the much-vaunted gas-to-energy project causing Jagdeo jitters?

The gas-to-energy project, while commendable, cannot fulfill Guyana’s medium-term energy demands.  It is expensive investment that will only generate 300 megawatts. That would not be sufficient over the long term of meet Guyana’s energy demand. But why invest so much money when natural gas is being treated as a transitional fuel? It makes no sense.

To reduce local greenhouse emissions by 70%, Guyana must diversify its energy sources. It therefore makes practical sense to invite expressions of interest for energy generation to compete with the gas-to-energy plant. Could Jagdeo be concerned that competing proposals might reveal the gas-to-energy plant as an over-expensive venture, producing energy at a relatively exorbitant cost compared to other options?

Another factor in this complex equation is the resurrection of the controversial Amalia Falls Hydroelectric Project. The developer previously withdrew from the project due to a lack of political consensus. Despite an objective study suggesting that the project was the quickest route to renewable energy, concerns have persisted. Jagdeo’s legacy appears closely tied to this venture, as his list of achievements as President remains relatively scant.

This might explain his reluctance to entertain proposals for long-term power purchase agreements. The Amalia Falls Hydroelectric Project is projected to cost over a billion US dollars, and if alternative energy generation can be achieved more affordably, it would undermine his cherished project.

Chinese investors have already backed out of the Amalia Hydroelectric Project. This constitutes a serious setback for Jagdeo, as the Chinese had previously been a key partner. Their withdrawal reflects a glaring rejection of Jagdeo’s pet project, a stark reality that challenges his vision for Guyana’s energy future.

Instead of cautioning Guyana’s diplomats against considering proposals, Vice President Jagdeo should advocate for solutions that offer energy at a cost lower than both the gas-to-energy plant and the Amalia Falls Hydroelectric Project. Such a stance would demonstrate his commitment to securing affordable and sustainable energy for Guyana’s future.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Both President Irfaan Ali and Vice President Bharrat Jagdeo, debate, Peeping Tom, suspicion, Vice President

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