US$840M Amaila Falls Hydro-electric plant…

US$840M Amaila Falls Hydro-electric plant…

Contract to be made public if Govt. agrees – CEO Sithe Global

JANUARY 26, 2012 | BY KNEWS |

Bruce Wrobel

The Chief Executive Officer (CEO) of Sithe Global, the United States-based company contracted to undertake the construction of the 165MW Amaila Falls hydro-electric facility in Guyana, says that he is willing to provide all of the contract details and relevant information on the project. This, he said, is intended to increase transparency.
Bruce Wrobel yesterday lamented what appeared in the past to be a project shrouded in secrecy and promised that should the other parties, specifically the Guyana Government, concur to make available the contract document, his entity would willingly do so.
For the document to now be made available, there is need for an approval from Head of State, Donald Ramotar or an empowered delegate.
“We need the others to agree, but we are willing to make the contract available.”
Wrobel told this publication that it is in the interest of transparency that he and his team ventured to Guyana to seek to attempt to clear the air. The Guyana Government from the beginning of the project has been deafeningly silent, only venturing to the press in defence when information is published.
The government has since informed Kaieteur News that the administration will be willing to facilitate making available the contract document with Sithe Global for the US$840M project.
Wrobel’s, during a press briefing on Tuesday, announced that Sithe Global will get a 19 per cent rate of return on its injection of equity of US$152M.
Sithe Global further disclosed pertinent information on the project as it relates to financing such as the close to US$2B that will have to be earned by the plant to repay the investors and lenders.
In terms of how the money will be used, the Sithe Global Chief Executive Officer, who was accompanied by Senior Vice President, Brian Kubeck, and Senior Vice President, James McGowan, explained that the Engineering Procurement and Construction (EPC) cost of the actual project will amount to some US$519.6M.
The total capital costs for the project, according to the Sithe Global officials, will be US$652.5M, taking into consideration additional construction, development, start-up, as well as contingency costs.
The remaining US$187.8M will go towards financing costs which include interest during construction (US$97.1M), lenders fee and advisory cost (US$34.9M), and Debt Political Risk Insurance (US$55.7M).
Speaking of the actual construction of the hydroelectric plant, the officials explained that of the US$519.6M in total capital expenditure, the plant is expected to cost US$314M, with the transmission lines demanding some US$126M. The additional US$79M is for currency adjustments.
Wrobel said that the United States and other major powers are asking the Chinese to appreciate its currency by some 20 per cent. If this happens before financing is completed then the project could cost a further US$160 million.
Interest during the construction will amount to US$97.1M.
At a projected average tariff of US$101M, the plant is expected to rake in more than US$2B over the 20-year period on the Build Own Operate and Transfer (BOOT) life of the project.
The plant is slated to last for at least 75 years. Wrobel said that usually such projects would last in excess of 100 years, since there are not many moving parts.
The US$2B to be earned from the plant will go towards making the repayments to Sithe Global, the China Development Bank and the IDB (should this financing entity come on board) over the 20-year Boot period.
Wrobel told this publication that it has never been a policy of Sithe Global to be in the forefront of divulging information and the company has learnt from adverse reports in the past.
He was referring to the reports circulating in relation to the Bujagali Hydropower Plant which was built in Uganda.
Wrobel said that is generally the Government involved that is usually supposed to divulge information to their electorate and populace.
“We recognize that there is a lot of misinformation in the press and that is why we decided to have an open policy and disclose,” said Wrobel.
The Amaila Hydropower Project is a planned hydroelectric project to be located in western Guyana. The project also includes a new 270 km transmission line and new substations near Georgetown. Currently, nearly all electric generation in Guyana is provided through small units burning either diesel or heavy fuel oil.
In 2002, Synergy Holdings and Harza International were granted a licence by the Government of Guyana under the Hydro-Electricity Act for the development of a hydroelectric plant at Amaila Falls.
The licence was reportedly amended and extended in 2004 when Harza pulled out leaving Synergy as the sole licensee. The licence was again extended in 2006.
Synergy Holdings was later granted a US$15.4 million contract to build the access roads to the proposed site for the hydropower plant. This contract was recently terminated because of under-performance.

–Post #1057

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Comments

  • Tyrone Foo  On 01/28/2012 at 9:51 pm

    An eye-opener. So informed knowing the facts

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