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Secrecy overshadows resurrected Guyana's Amaila Falls Hydro Electric Project





By  Kaieteur News

Petroleumworld 09 28 2021

Kaieteur News – The Irfaan Ali-led administration has made good on its commitment, to restart the process to construct the ‘controversial’ 165 megawatt (MW) Amaila Falls Hydro Electric Project, along with the related transmission line to the Sophia substation and the upgrading of 122 kilometres (km) of existing road, in addition to the construction of 85 km leading to the site.
The Office of the Prime Minister, which holds responsibility for the energy portfolio, yesterday formally advertised a Request for Proposals (RFP), for either a 20-year, Build Own Operate Transfer (BOOT) model, or a Design Build Finance (DBF) option.

According to the request by the Ministry, government is not bound to accept any response to the RFP and in fact, “reserves the right to select any party (ies) for any specific element of the RFP and to annul the process at any time without further direction, without thereby incurring any liability to the affected parties.”

Additionally, according to the administration in its request, all pertinent information in possession of the government will be made available via a secured website upon completion of a Confidentiality Undertaking/Non Disclosure Agreement.

The RFP outlines that the Guyana Power and Light’s (GPL) current Development and Expansion Plan for 2021 to 2025, projects total capacity required in 2025 as 465MW and energy of 2,9000 (gigawatt hours) GWH.

As such, the government proposes an energy mix that will utilise both Natural Gas, Heavy Fuel Oil (HFO) and renewable, namely hydro, solar and wind.

It was noted that in 2026, government expects the demand to be met by dispatching from its lowest cost of supply, “which is expected to be derived from gas up (to 300MW), Amaila (165MW) and other renewable and non renewable capacity, to make up any balance or serve as back up.”

Under the scope of the project which the Prime Minister’s Office said was last defined in early 2015, the successful proposal would see the start of works in mid 2022 and earmarked for commissioning in 2025, would include the 165MW installed hydro dam, plant and related works.
Additionally, the selected contractor will be required to install the related transmission line and structures along a 270 kilometre route from the Amaila Falls site to the Sophia Sub Station.

This is in addition to constructing 230 kilovolts (KV) substations in Linden and Sophia, the creation of a 23 square kilometres storage reservoir and the upgrades to the roads originally constructed by controversial contractor, Makeshwar ‘Fip’ Motilall, in addition to the completion of some 85 kilometres of new roads leading to the site.

The Office of the Prime Minister noted that as it relates to the options provided, under the BOOT arrangement, the proposed ownership and repayment period would be 20 years, “with all the cost of the project from commissioning date, being borne by the developer, and the project reverting to the government at the end of the BOOT period at no cost.

Under the DFB arrangement, government would take over the project and, once satisfied with it, will assume ownership and assume repayment obligations.

Potential interested parties have been given up to the end of this month to prepare and submit proposals to the national procurement and Tender Administration Board (NPTAB).

The controversial Amaila Falls Hydro Electric Project was first proposed to the administration Motilall, a Florida based grocery store and religious items retail store owner in Florida, at an initial cost of US$450M—a cost that escalated in ensuing years to more than US$1B.

Having failed to secure financiers for the project, Motilall flipped the Licence for US$12M—a licence he secured for the development of the project—to an American, Firm Sithe Global, for US$12M, which was supposed to have proceeded with the project with the help of the Chinese funding and Contractor.

He was subsequently handed a US$12M to build the road, despite no proven experience and failed miserably in the attempt.

The project was subsequently pulled from Motilall and later retendered to a number of contractors’ executing different sections of the road—a road to nowhere that ended up costing the administration almost three times more.

Funding for the project at the time was supposed to have come from a variety of sources including US$100M in equity from the Guyana Government.

Guyana had committed US$15.4M for the construction of the access road as part of the equity, with the remainder of the equity coming from the LCDS initiatives such as the Memorandum of Understanding signed with Norway for some US$250M.

The majority of the project (70 percent) was supposed to be had from the China Development Bank and the IDB.

The IDB was being sought after for US$175M while the China Development Bank would have provided some US$413.2M, and US$152.1M from Sithe Global, would have brought the total project cost to US$840.3M, at the time.

The project cost ended up escalating for varying reasons, including the securing of US$100M in a bank account by GPL to ensure guarantee commitments.

The People’s Progressive Party Civic administration at the time had also moved to the National Assembly to raise the debt ceiling in order to satisfy the financiers of their repayments.

In 2013, the company opted to pull out of the project citing lack of political support when the political opposition voted against the project.

Sithe Global’s President, Brian Kubeck, at the time said, “the project was too large to continue without national consensus.”

Among some of the non-financial concerns that had accompanied the proposed project was the environmental impact to the immediate surroundings and the fact that the falls was prone to run dry at times during the course of the year which had required that GPL maintain its existing facilities at all times in order to serve as a backup.




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