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December 29,2016  Source

Jagdeo calls for swift restart of Amaila Falls Hydro Project -accuses gov’t of misrepresenting Norconsult report.

Leader of the Opposition Bharrat Jagdeo today called for the urgent restarting of the Amaila Falls Hydropower project and he accused the government of misrepresenting the Norconsult report which was intended to be a facts-based assessment of the project to guide Guyana and Norway.

The statement from the Leader of the Opposition follows:

Government claimed that the recently-released independent assessment of the Amaila Falls Hydropower Project vindicated APNU+AFC’s years of effort to destroy the project. This claim plunges new depths in this Government’s disregard for the truth – in actual fact; the independent assessment urges the Government to re-start AFHP immediately. The PPP calls on all concerned Guyanese to read the assessment for themselves, and to join with the PPP to put pressure on the APNU/AFC Government to quickly re-start the project.

Yesterday, the APNU/AFC Government issued a statement about the recently-released independent assessment of the Amaila Falls Hydropower Project. The assessment was carried out by the internationally reputable consultancy, Norconsult.

The APNU/AFC Government claimed that the Norconsult assessment justified the Government’s efforts to abandon the Amaila Falls Hydropower Project (AFHP). Even by the low standards of APNU/AFC, this plunges new depths in their utter disregard for the truth, and it clearly shows the Government’s contempt for the people of this country. Guyanese families and businesses are still paying way too much for dirty, unreliable electricity, when they should be on the threshold of affordable, clean and reliable electricity. They deserve the truth about Amaila Falls.

We set out below our reaction to the Norconsult assessment – which originated from the Leader of the Opposition Bharrat Jagdeo’s call for a fact-based assessment of AFHP. However, we also urge all patriotic Guyanese to read the assessment and form their own view on what it says. We are confident that intelligent, independent-minded Guyanese will see that the assessment vindicates the project, and supports re-starting it immediately. Contrary to what the APNU/AFC Government has claimed, the Norconsult assessment actually says:

  • “The only realistic path for Guyana towards an emission free electricity sector is by delivering its hydropower potential” – page 3
  • “The new *APNU/AFC+ Government has confirmed its devotion to the Low Carbon Development Strategy, which was introduced by the former *PPP/C} Government in 2009”       – page 3
  • “We regard the soundness of AFHP as evident and in order to follow up the intentions of the LCDS as fast as possible, we recommend the preparations for AFHP to be          resumed.” – page 38
  • “It is our opinion that the BOOT type public-private partnership model should be maintained for the project implementation. An internationally well-merited investor and operator in the hydropower industry should be invited to take the majority position” – page 4

In short: the assessment vindicates the PPP position that Guyana should develop its hydropower capacity and that AFHP should be the first hydropower project to be developed.

Crucially, it reaffirms that the BOOT type public-private partnership model – which the then APNU+AFC Opposition destroyed in August 2013 – is the right financial structure for AFHP.

Up until yesterday, APNU+AFC, first in Opposition and then in Government, claimed that their concerns with the project related to the financing costs which are associated with this BOOT type of partnership. They made wild claims about the cost of the project and the resulting cost of electricity, and repeated the ridiculous claim that the project would saddle Guyanese with decades of debt. They also claimed that the EPC contracts had been awarded through closed, corrupt practices.

However, in yesterday’s statement, they did not mention these concerns at all – because they have been thoroughly debunked by Norconsult. The independent assessment says:

  • “After competitive bidding between five pre-qualified candidates, AFHI in 2008 selected China Rail First Group (CRFG) as EPC Contractor.” – page 12
  • “Constructing Amaila Falls would cut electricity costs by more than 50% for the energy produced by AFHP, or US$3,3 billion over 20 years” – page 32

In their statement yesterday, APNU+AFC hid how they are no longer making claims about the financial model by instead claiming that there were mission-critical engineering issues to be solved. This is not true – the Norconsult report sets out some design areas for consideration as the project progresses, but also notes that these areas were already being looked at. Norconsult clearly states “Although certain design aspects of AFHP should be reviewed and revised, we regard the soundness of AFHP as evident and in order to follow up the intentions of the LCDS as fast as possible, we recommend the preparation for AFHP be resumed” – page 38.

Instead of focusing on these engineering issues, APNU+AFC should have looked at areas where the project’s financing can be improved – the Norconsult assessment sets out several sensible recommendations which deserve further discussion and analysis. The PPP does not agree with all of these recommendations, but will support any efforts go get costs down further if possible. Specifically, the assessment sets out several recommendations to reduce costs from c. US$858 million to US$801 million – on page 33. These reductions come from three places:

  • US$20 million of the reduction relates to taking the cost of the access road out from the project, given that the road is already constructed. This is a sensible reflection of reality, although it does not mean that US$20 million has been saved, only that it has been invested already.
  • Further reductions are based on the new private investor securing a return of 17% instead of a return of 19% on equity investment – the PPP believes this to be sensible as it is in line with where the PPP expected the final position to be on AFHP back in 2013. It is also in line with global benchmarks for this type of capital being invested in markets similar to Guyana.
  • The rest of the reductions are based on assumptions that some financing can be achieved at slightly lower interest rates in the capital markets or by increasing the repayment period for some borrowing. The PPP believes that these financing reductions are not likely to be achievable for Guyana, but supports testing the capital markets to see if better rates can be achieved.

There are also several other areas where the assessment could encourage discussion on improving the project. For example, on page 32, the assessment also states that “the original PPA had a risk allocation which was not well balanced”. We agree with this statement, but point out that this risk allocation was already being improved when the project was put at risk by APNU+AFC. Regardless, we believe that an updated discussion about realistic risk allocation should be taking place as part of advancing the project today.

However, it is important to re-emphasise that even with the original financing structure, AFHP would have delivered more electricity for less money than today, avoided any public debt for Guyana, and reintroduced Guyana to the global capital markets for the first time in 40 years. Any marginal improvements that can be achieved now are dwarfed by the losses incurred by Guyana because of APNU+AFC’s actions since August 2013.

To try and repair the damage, Norconsult sets out how AFHP can be operational in six and a half years time – mainly because the original tenders date from 2008 and now need to be re-tendered.

This is six years too late because AFHP should have been providing affordable, reliable, clean energy to Guyanese within the next few months. However, given that the wasted time cannot be re-gained, we must focus on the future.

The PPP wishes to see AFHP re-start immediately, and is willing to engage in discussions on all the recommendations set out in the Norconsult assessment. With that in mind, the PPP calls on all Guyanese to join with us in ensuring that the APNU/AFC Government acts in the interest of the people of Guyana, apologises for their repeated lies about the project and instead works to make AFHP a success.

Replies sorted oldest to newest

Maharaja Bharat rips apart these AFC/PNC Ko Ko Beah clowns and liars.

Maharaja Bharat Ki Jai !!!!!

Maharaja Bharat will become a Mahatma if he wins the next bid for Presidency in replacing these AFC/PNC clowns:

." Contrary to what the APNU/AFC Government has claimed, the Norconsult assessment actually says:

“The only realistic path for Guyana towards an emission free electricity sector is by delivering its hydropower potential” – page 3
“The new *APNU/AFC+ Government has confirmed its devotion to the Low Carbon Development Strategy, which was introduced by the former *PPP/C} Government in 2009” – page 3
“We regard the soundness of AFHP as evident and in order to follow up the intentions of the LCDS as fast as possible, we recommend the preparations for AFHP to be resumed.” – page 38
“It is our opinion that the BOOT type public-private partnership model should be maintained for the project implementation. An internationally well-merited investor and operator in the hydropower industry should be invited to take the majority position” – page 4"

"However, in yesterday’s statement, they did not mention these concerns at all – because they have been thoroughly debunked by Norconsult. The independent assessment says:

“After competitive bidding between five pre-qualified candidates, AFHI in 2008 selected China Rail First Group (CRFG) as EPC Contractor.” – page 12
Constructing Amaila Falls would cut electricity costs by more than 50% for the energy produced by AFHP, or US$3,3 billion over 20 years” – page 32"

FM

The saga of politics continues,  each party seeing what they want to see in the report.  The public don't even know who to believe.  In addition there is no independent opinions in Guyana, all newspapers are politically aligned. 

FM

Due to GPL's lack of institutional and financial strength, and GPL having no earlier experience inhydropower development, we think it out of the question that Guyana may be able to implement its firstmajor project as a 100% public sector undertaking.

We are fully aware of the circumstances, which lead to the negotiations with China Rail after SG withdrew from its position. The double role as main sponsor/majority partner in an SPC and EPC Contractor in an agreement with the SPC, as tried with China Rail, however, is not a concept that we would recommend in a possible effort to revive AFHP. It would implicate serious conflict of interests between the main sponsor's two roles.

His first priority would certainly be as EPC Contractor, whichwould put SPC as minority partner in the SPC and as power off-taker in an unfavourable position.Introducing an Independent Engineer in such case for overseeing the proceedings in the SPC, might have improved the situation somewhat, but not solved the basic problem.Re-establishing the arrangement with China Rail on the same basis as before, might seem to be a fastertrack than starting all over from square one with a new EPC Contractor. As said above, we would advise against it, by the inherent conflict of interest it implies, as well as by other reasons covered elsewhere in this Report.

 

Page 15 of Report.

Django
Last edited by Django

When the dust settles, it will be quite clear that Amaila Falls hydroelectric project is best suited for Guyana's development.

BOOT do have its merits and it is one of the options which I stated on past issues for this project.

FM

Now, this might be a model for a young democracy. Jagdeo's PPP came up with a hydroelectricity plant of almost US$1 bill for a country with GDP of around US$3 billion. The then opposition argued the project was inflated due to corruption and that the macroeconomic risk was too high. The corruption claim is understandable given the manner in which the contract to build the access road was awarded. Now in govt, the former opposition gets some independent engineers from Norway to do an independent study. The engineers found ways to improve the technical design and slightly reduce the cost to US$801 mill, I believe. This means the Jagdeo PPP did not inflate the number to benefit from the once pervasive kick-back tax. If we agree that LCDS is the way to go (and I do believe so), then start the planning for Amailia. It is time to reactivate the project. As the report says, they will still require solar and wind. However, the political class from both side appears united on one front: they appear to agree sugarcane must die. There is no room in LCDS for sugar-based ethanol and bagasse, two obvious ways to save the industrial complex that is Guysuco if only they could create an E10 mandate. Time to work together on the road to Amaila...

FM

Amaila should not be DRIVEN by LCDS.  It should be driven by need and benefits for the people of Guyana.  Zero emissions should be a secondary benefit.

FM
Last edited by Former Member
VVP posted:

Amaila should not be DRIVEN by LCDS.  It should be driven by need and benefits for the people of Guyana.  Zero emissions should be a secondary benefit.

I agree with this. You cannot have zero emissions in a developing country. It just so happen that Guyana has the natural base for an industrial strategy premised on renewable energy. As we have noted here, even with Amaila you still cannot shut down all the fossil fuel generators.

FM
Last edited by Former Member
TK posted:
VVP posted:

Amaila should not be DRIVEN by LCDS.  It should be driven by need and benefits for the people of Guyana.  Zero emissions should be a secondary benefit.

I agree with this. You cannot have zero emissions in a developing country. It just so happen that Guyana has the natural base for an industrial strategy premised on renewable energy. As we have noted here, even with Amaila you still cannot shut down all the fossil fuel generators.

Right.  They can factor in what Norway will contribute to the project in the C/B analysis but zero emission should not drive decisions in a developing country.

BTW, who came up with that 100% renewewable goal by 2025?  I don't believe these people understand the implications. If we can do it benefically with hydro fine, but wind and solar will not cut it because of high costs.  Guyana does not have the money to subsidize these types of projects.

FM
VVP posted:
TK posted:
VVP posted:

Amaila should not be DRIVEN by LCDS.  It should be driven by need and benefits for the people of Guyana.  Zero emissions should be a secondary benefit.

I agree with this. You cannot have zero emissions in a developing country. It just so happen that Guyana has the natural base for an industrial strategy premised on renewable energy. As we have noted here, even with Amaila you still cannot shut down all the fossil fuel generators.

Right.  They can factor in what Norway will contribute to the project in the C/B analysis but zero emission should not drive decisions in a developing country.

BTW, who came up with that 100% renewewable goal by 2025?  I don't believe these people understand the implications. If we can do it benefically with hydro fine, but wind and solar will not cut it because of high costs.  Guyana does not have the money to subsidize these types of projects.

The 100% thing is just a slogan.

FM

The Norconsult report zoned in on the 100% like it was a "mandate.".

Granger made the 100% statement at the UN, I think.  Wonder if he got applause or smirks.  Knowing the audience there it was most likely applause LOL.

FM
VVP posted:

Post footnote 9 of the report Djanjo.

9.During the years after CRFG was selected as EPC Contractor in 2008, serious corruption charges have been raised against CRFG's parentcompany related to domestic affairs in China. This has caused the The Norwegian Government Pension Fund Global to dispose of its shares in CRFG. It is not likely that Norway could accept to maintain its support to the project if CRFG reappears in a key development role for AFHP like sponsor or EPC Contractor

 

Page 13 of report.

Django
Last edited by Django
Django posted:
VVP posted:

Post footnote 9 of the report Djanjo.

9.During the years after CRFG was selected as EPC Contractor in 2008, serious corruption charges have been raised against CRFG's parentcompany related to domestic affairs in China. This has caused the The Norwegian Government Pension Fund Global to dispose of its shares in CRFG. It is not likely that Norway could accept to maintain its support to the project if CRFG reappears in a key development role for AFHP like sponsor or EPC Contractor

 

Page 13 of report.

Thanks.  So basically the contract was awarded to a corruptocrat that Norway will not recognize.

Jaggi mentioned CRFG in his press release but left out this LOL. Palatics bai palatics LOL.

FM
VVP posted:
Django posted:
VVP posted:

Post footnote 9 of the report Djanjo.

9.During the years after CRFG was selected as EPC Contractor in 2008, serious corruption charges have been raised against CRFG's parentcompany related to domestic affairs in China. This has caused the The Norwegian Government Pension Fund Global to dispose of its shares in CRFG. It is not likely that Norway could accept to maintain its support to the project if CRFG reappears in a key development role for AFHP like sponsor or EPC Contractor

 

Page 13 of report.

Thanks.  So basically the contract was awarded to a corruptocrat that Norway will not recognize.

Jaggi mentioned CRFG in his press release but left out this LOL. Palatics bai palatics LOL.

"However, in yesterday’s statement, they did not mention these concerns at all – because they have been thoroughly debunked by Norconsult. The independent assessment says:

“After competitive bidding between five pre-qualified candidates, AFHI in 2008 selected China Rail First Group (CRFG) as EPC Contractor.” – page 12


The above is what Jagdeo said.

The palaticians in Guyana knows who to fool.

Django
VVP posted:

 

Granger made the 100% statement at the UN, I think.

You know that Granger is just running his mouth because it sounds nice. The man doesn't have the vaguest idea of how to achieve that goal. In fact he thinks that a fossil fuel will be Guyana's salvation.

Poor man.  This is why Harmon steals and laughs at those who demand that he be fired for this. Without him I don't know if Granger would even know how to find his office.

FM

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