Georgetown : Minister of Finance Winston Jordan says that the A Partnership for National Unity+ Alliance for Change (APNU+AFC) Government is prepared to explore every avenue to reduce the cost of energy, including examining the Amaila Falls Hydroelectric Power Project. The problem, however, the Minister said is that as currently configured, it would not only be irresponsible, but a downright criminal act of deception, were Government to proceed with the Amaila Falls.
Addressing the National Assembly, during his 2015 Budget presentation yesterday, Minister Jordon revealed that “investigations have revealed that at the current cost of almost $1 billion, the Guyana Power and Light Inc (GPL) would be required to make annual payments amounting to US$130 million to the operators of the hydro facility, which will total US$2.6 billion over the 20 year commitment period of the power purchase agreement.” This does not include Guyana's contribution of at least US$160 million (US$45 million for the road, US$80 million equity through Norway, and US$35 million loan from IDB); and the garnishing of US$65 million of our foreign reserves, Minister Jordan said.
“It would be delusional to suggest that GPL has the competence to handle such a financial burden,” he noted. He pointed out that the GPL is known to have a poor operational, financial and technical capability. The company suffers from high energy and technical losses and fuel price volatility. “It would require not only massive tariff increases, but guarantees taxpayers, through the treasury, will provide transfers to meet this obligation,” Minister Jordan pointed out. “It also assumes that businesses would be willing to abandon their lower cost power generation and take the chance that GPL will be able to satisfy their energy demands. Added to this, is the fact that Guyana would be left with all the contingent risks of the project,” he noted.
The identification of Amaila Falls as a potential site for hydropower dates back some 40 years. Minister Jordan noted that the new Government would welcome the diversification of our energy matrix to include clean, sustainable and affordable sources. He said however, “It must make financial sense!” “We know now, that as configured currently, the cost of financing is too high, and that unless the price tag can be substantially lowered, we cannot proceed. In this opinion, we are strongly supported by the experts at the Inter-American Development Bank, who had considered the project to be too risky to attract the Bank's financing,” he said.
Looking forward, the Finance Minister said that over the next five years, the new Government will adopt a more integrated approach to providing for our energy needs. “We will examine all sources of energy-fossil fuels, wind, solar, baggasse and, of course, hydropower. We will commence feasibility studies for a large hydropower development in the Mazaruni region,” Minister Jordan said. He explained that this will be done in collaboration with Brazil; further Government will encourage independent power producers and suppliers to construct energy farms and sell energy to the national grid.
Government will construct and/or promote the construction of small hydro systems in areas such as Moco Moco, Kato and Tumatumari, and will power all of our new townships, starting with Bartica, using alternative energy sources.
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