Amaila Falls Project flawed, represents waste, mismanagement
Professor Clive Thomas has come out to discredit Guyana’s largest financial undertaking—the Amaila Falls Hydro Project (AFHP.) He identified numerous shortcomings and discrepancies linked to the Amaila Falls project. Professor Thomas advised that “painful as it may be, it is better to get out of flawed business deals sooner rather than later.” He said that if the private sector is as enamored as it says about the profitability of this government project, it should stand the cost; such a shaky project should not be the burden of taxpayers.
Professor Clive Thomas holds his recently completed comprehensive study on the Amaila Falls project.
The economist has completed the first comprehensive study prepared on the project by any entity other than the government of Guyana. The publication is titled “Eight essays on the political economy of the Amaila Falls Hydro Project.” It was reiterated that the WPA differs on many opinions held by the parliamentary opposition parties including A Partnership for National Unity (APNU) of which the WPA is a member. The party said that it will stand its grounds on its ideologies and will fight in the APNU what they feel is the better position to be taken in parliament. Professor Thomas concluded that if with all the questions being raised on this project, private investors still believe that it is worthwhile, they should be the ones making the entire investment. The economist was adamant that smart people should pull out of the project before it is too late, but noted that if there is so much hope in the project, the ones with all the hope should be the ones investing. He said that the taxpayers should not be the ones feeling the squeeze. Thomas pointed out that there are disconcerting reports that the parliamentary Opposition plans to make its decision on whether to support the Project, or not, by piggy-backing on the Inter American Bank’s willingness to commit funds to it, after reportedly the World Bank has walked away from the Project. Towards that the economist expressed that “Guyanese deserve leadership of better quality and more national dignity. The Economist said that he does not know the politics of the IDB. He added that the simple truth is that any study can be made to service what the investors have in mind. “What we need is an independent study,” said Thomas. Thomas noted that the WPA believes that strategically, hydropower is indispensable to Guyana’s economic transformation and development. However, Thomas noted that “this strategic value does not automatically translate into the selection of a specific hydropower project, including the AFHP, as the economically efficient choice. That has to be separately established.” Thomas said that the AFHP is identified as one in a class of “troubled public projects”, with several distinguishing features, including: the absence of publicly available systematic project evaluations for independent assessment of these; prolonged delays; escalating costs; questionable financing arrangements; waste and mismanagement; public controversies; non-transparency; and signs of “opportunistic rogue investing”. The economist asserted that the project turned out to be such a “disaster” because it is not presented as a “stand-alone project.” Thomas said that as a standalone hydropower project, the AFHP is ill-conceptualized and mis-specified in its ecological-economic dimensions. Another point was that while the AFHP’s technical-engineering specifications can only be fully verified after it is up and running, today’s technical/engineering challenge is to minimize, within tolerable limits, the likelihood of failed outcomes. He said that there is doubt about achieving the aforementioned. He identified, too, that the government’s promotional literature identifies the government of Guyana as the Project Guarantor. “This instantly raises its contingent external liability by US$750 million (as indicated in the Motion before the National Assembly) or about 30% of GDP.” Thomas added that, the Project has always been promoted as a public-private partnership (PPP), and was initially welcomed by the IMF-World Bank because of this. Cynically, Government and private sector spokespersons are relabeling it now as a private project! However, the most recent official promotional literature (June 2013) still cites the government as Project Guarantor! Noting that the AFHP will be executed through Amaila Falls Hydro (AFH) Inc, Thomas said that this is a Special Purpose Vehicle (SPV) created as an off-balance sheet device by its parent company Sithe Global.