Aug., 13, 2013
Yesterday, the APNU issued a statement where they definitively put on record why they continue to not support the Amaila project.
Previously, they said they were not being consulted properly—but now it seems that the APNU has decided that this is no longer a defensible strategy: “I want to stress, the issue as far as I am concerned is not that the Government hasn’t given us information… they have given us information, there isn’t any doubt about that.” (Carl Greenidge, APNU Press Conference, August 12 2013)
According to the statement, their non-support is grounded in three overarching reasons.
- The financial structure of the project “is likely to condemn Guyanese to excessive indebtedness”
This is simply not true: NO government borrowing is taking place under the Amaila Falls Project. Government is not taking out any debt or directly guaranteeing any capital in the project. Under the project, the Government, as owner of GPL, is merely guaranteeing that GPL will make its annual payments for purchasing the power from the hydro.
The total cost to the taxpayer is US$100 million in equity. None of this is debt. US$15 million has already been spent, and most (US$80 million) of the remainder is already deposited in the Guyana REDD+ Investment Fund and awaiting transfer.
Moreover, after Amaila is operational, the total savings to the taxpayer because of the removal of GPL’s subsidy will be at least US$30 million per year, or US$600 million over twenty years – far in excess of the US$100 million provided by the taxpayer in equity.
- Government has not provided concrete information on the expected savings on tariffs from the project
This statement is also simply not true. As has been explained repeatedly, over the coming years, the consumer tariff will come down because of Amaila Falls and a separate project to modernise GPL (as correctly acknowledged in APNU’s statement).
Today, GPL’s biggest cost by far is its cost of electricity generation, which is currently at the level of US19c per kw/h. With Amaila Falls Hydro, GPL’s cost of electricity will be dramatically reduced, to:
- 11c per kw/h in the first twelve years, 40% less than today
- 5.6c per kw/h in the next eight years, 71% less than today
- 1.8 c per kw/w for the following eighty years, 91% less than today
The combination of the above savings and the removal of GPL’s subsidy (to save the taxpayer 6 billion dollars per year) means that the end user tariff will come down by 20% within two years of Amaila’s commercial operation.
- They were not presented with a comprehensive document describing the project:
The Government of Guyana has provided comprehensive information on the project to the Opposition in the past 18 months—this includes: 1) three comprehensive presentations on the project, 2) all three significant initialled project agreements: Power Purchase Agreement (PPA), Receivables Agreement (RA) and the Implementation Agreement (IA) 3) two market/economic assessments prepared by one of the world’s leading independent firms concerned with economic assessments for the energy sector, Mercados Eneregiticos;
A representative table of contents for the three presentations made by Government to the APNU is as follows:
- Amaila Falls Project Overview
- Environmental and Social Safeguards and Standards
- Equity Sponsors Background
- Technical Consultants
- Project Structure
- Estimated Project Sources and Uses
- Project Cost History Comparison
- Key External Factors
- Interest During Construction and Political Risk Insurance
- Sithe Global Development
- Shareholder: Amaila Falls Hydro
- Benefits of GRIF Investment in Amaila Hydro
- Legal Overview: Performance Guarantee, Key Project Documents, Primary Project Risks and Mitigants
- Key Project Dates
- GPL Overview: GPL Sales, Generation Costs and Growth
- GPL Snapshot: GPL Financial Snapshot, GPL Historical Production Costs, GPL Fuel Challenge, GPL Generation Cost
- Projected GPL Tariffs, GPL Reform Plans, IDB Support in GPL’s on-going reform, GPL Reform Plans
In addition to documents provided by Government, the project’s sponsor, Sithe Global, has publicly posted a number of documents on the project’s website, including Environmental and Social Impact Assessment documentation, consultation reports and public presentations.
So in sum: APNU is destroying the Amaila Falls project because they say it will burden Guyana with debt (even though it won’t), that it will not deliver significant savings to the consumer (even though it will), and because they did not have all the documentation (even though they did).
Every single person in this country will suffer because of their mistake.