Hydro power
…says Govt will meet requirements for US$80M
While Minister of State Joseph Harmon had said Government shelved the idea of continuing the Amaila Falls Hydro Power (AFHP) project, Natural Resources Minister Raphael Trotman on Friday affirmed that the project is actually a renewable energy option for Government.
The AFHP, initiated by the PPP, has been the source of political gridlock for years
Trotman was at the time fielding questions before the Natural Resources Committee of the National Assembly. Asked about the conflicting statements on hydro, he denied that the project was off the table.
But while he noted the project – which was a brainchild of former President Bharrat Jagdeo – has potential, the Minister observed that funding is an issue. In addition, Government is still interested in using the natural gas that goes hand in hand with oil production.
According to Trotman, Government has every intention of fulfilling the requirements for the release of US$80 million in funds from Norway. This money was intended for hydropower development. However, it was put in limbo with the perceived shelving of the Amaila project.
“There was some concern about the Amaila project,” Trotman said. “And there is $80 million gathering interest at the IDB. Government has every intention of fulfilling its obligation, to ensure we don’t lose it.”
When questioned by Chairman of the Committee, Odinga Lumumba, Trotman admitted that Government has not requested the release of the funds.
“The Government of Guyana, while it has voiced its concerns, has never taken it (Amaila Falls project) off the table. And even now, (we are looking at) whether or not it has the supply of water to generate (adequate power).”
Minister Harmon was quoted in sections of the media in October 2017 confirming the Government’s interest in natural gas, which will be brought up alongside oil by ExxonMobil. He had noted that because of the difficulty in soliciting an investor, a decision was taken to look at other energy alternatives.
Political gridlock
According to the US State Department’s latest economic bureau, “political gridlock and infighting” is to blame for hampering Guyana’s development efforts in several instances. Relative to this, the report cites the example of the AFHP, which the coalition Government has officially abandoned.
“The Amaila Falls Hydropower Project (AFHP), which would have been the largest capital project in the country’s history, fell apart after a decade of planning when the US developer and equity partner withdrew from the multinational development team in August 2013,” the report stated.
“The company expressed concerns over political risk following objections to the venture by the then-Opposition party [the A Partnership for National Unity] APNU,” the report continues. “The Norwegian Government subsequently conducted a new feasibility study on the AFHP and submitted the report to the Government.”
This is a reference to a report from Norwegian international consultant Norconsult. The new report had in fact concluded that the Amaila Falls Hydro Power Project was the only realistic way for Guyana to achieve an emission free electricity sector. Norconsult had noted the merits of the project, such as its completed feasibility study and a higher plant load than the other alternatives.
However, the report had recommended the BOOT (Build, Own, Operate and Transfer) public private partnership model is used. The consultant had urged that an international investor specialising in hydro power be invited to take a majority stake in the project. It is unclear whether this advice has been acted upon by the government.
The report states: “The only realistic path for Guyana towards an emission free electricity sector is by developing its hydropower potential. The fastest way forward is to maintain AFHP as the first major step for substituting its current oil fired generation. AFHP was prioritised as the first hydropower plant because it was the only project with a full feasibility study completed; it has a higher plant load factor than the alternatives, a smaller reservoir and a unit cost in the same range as the most attractive alternatives.”
US report
In the absence of Amaila, the US State Department report acknowledged the Government touting other areas and renewable energy sources. It noted that if potential renewable energy projects are successful, this would promote more investments as high energy costs are barriers to value added investments.
The AFHP, which formed part of Guyana’s Low Carbon Development Strategy (LCDS), was commissioned in 2009. However, having taken up office in 2015, the now Government had repeatedly stated its disapproval of resurrecting the project.
But former President Jagdeo had said the coalition Government has killed the project, although it was set to provide Guyana with a massive source of electricity.
Operational
The Amaila Falls could have been almost operational by now and consumers could have been close to seeing the end to expensive and unreliable electricity. Guyana would have been entering into the ranks of the top 10 users of clean energy worldwide.
The project, which would have been the largest Foreign Direct Investment (FDI) in the country’s history, had the potential to reintegrate the country with the global capital markets for the first time in over 40 years.
