Red flags over Amaila Falls Hydro project and China Railway First Group

Red flags over Amaila and China First Railway are catalysts for a change in govt.

February 28, 2015 | By |Letter by Emile Mervin
Amaila Falls Hydro Dam

Amaila Falls Hydro Dam

Your Friday, February 27 lead article, “Controversial Amaila Falls hydro…Govt. stands behind Chinese contractor – says IDB has safeguards,” should be the catalyst for voters to send the PPP packing May 11.

I have not known of any project that has captured, with growing consternation, the attention of a nation because of its sheer enormity in size and price, yet not many are convinced it will benefit the nation.

It seems as though this project is about the PPP being determined to score political points, perhaps lining some politicians’ pockets, and not about the people of Guyana, despite pleas and concerns by others for a delay in pursuit of the project to ensure it has been thoroughly reviewed by important stakeholders.  

It does not seem to bother the PPP anymore when citizens express concern over anything it is doing, and so the only thing to stop the PPP, short of national pressure, is to vote it out of office. How can the PPP justify to Guyanese, especially those whom it is canvassing for votes, that this project is still financially feasible after all that played out in terms of information about the project?
That Amaila went from an original estimated cost of US$450M to almost US$900M without a brick being laid should be the first red flag. That former President Bharrat

Jagdeo invited Makeshwar ‘Fip’ Motilall, the original builder, to his office and signed a US$15M deal for Motilall to build the entire access road to the generating facility, even though media houses and stakeholders bemoaned the fact Motilall never built a driveway or sidewalk, was another red flag.

That Sithe Global, which purchased from Motilall the licensing right to build Amaila, was going to put up around US$120M towards the project as a minority investor and then become a majority stakeholder, as builder, owner and operator, was another red flag.

That Jagdeo traveled to China in 2010 and signed a loan deal worth US$500M for Amaila, with government as the guarantor, even though the project is supposed to be largely private-funded and operated, was another red flag, because the Chinese do not lend that kind of money unless they are involved in the project.

With Sithe Global out of the picture, that brings us to the unfolding decision by the government that the Chinese – China Railway First Group – will now be the new builders of Amaila. If the Build, Own, Operate and Transfer (BOOT) clause that was inserted in the original deal still holds, then it means that Amaila will be owned and operated by the Chinese. That is another red flag, because with Bosai, the Chinese-owned bauxite company in Linden, supplying Linden and other parts of Region 10 with electricity, it will now mean that the entire country’s electricity supply will be done by all-Chinese, as Amaila will be supplying GPL.

The Chinese company, CRFG, already won a US$270M contract to widen roads along the East Coast of Demerara, even though it was found to have tendered a defective bid. Right there was a red flag that everyone simply ignored! CRFG also benefited from US$42.7M to help complete the access road to Amaila started by Motilall (US$15.4M), and is now going to spearhead an almost billion-dollar hydro project.

Do these construction agreements call for an importation of Chinese labour, as happened with the Marriott in Georgetown, or will Guyanese labour be used on either or both projects?
It really does not help the PPP regime’s argument in favour of this project or any project, for that matter, that involves the Chinese, because of the strong perception of corruption in the government.

Besides the recent concerns by Norway, a decision was taken last November in Mexico to send another Chinese company packing after Mexico’s government, citing doubts and concerns by opposition lawmakers and other stakeholders, announced it was scrapping a US$4.3B bid by the Chinese to build Mexico’s first high-speed rail project.

Bloomberg News reported the bidding had reportedly come under scrutiny by the opposition National Action Party, with lawmakers accusing the government of favouring the Chinese proposal and saying the sole bid was too expensive.

A Communications and Transportation Ministry statement stated that President Enrique Pena Nieto ”is sensitive to the fact that such an important project with such high benefit for society not raise any doubt.” The high-speed rail will go up for open bidding again.

In Guyana, the bid for construction of Amaila, which stalled because of concerns by local opposition members and certain analysts and commentators, started with Motilall, then it went to Sithe Global and now it is with CFRG, with no real open bidding by companies, which begs the question: Why didn’t the PPP government place the project back up for open bidding once Sithe Global left?
The fact that the project simply changed hand three times without any new public bidding raises another red flag about the government’s respect for transparency and accountability. Amaila may well be built, but definitely not under this corrupt PPP regime, which has a knack for making deals with equally corrupt partners.

May 11 is going to be critical to the future of Guyana, as Guyanese will either be saved from the corrupt PPP and corrupt Chinese contractors or saddled by huge financial burdens under both

Emile Mervin

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  • Clyde Duncan  On 02/28/2015 at 1:55 pm

    Suggested reading – purchase at a bookstore, or pick up at your local library: Confessions of an Economic Hitman by John Perkins; and Globalization and Its Discontents by Joseph E. Stiglitz

  • Vivian Fredericks  On 02/28/2015 at 6:29 pm

    Editor, I find difficulties in agreeing with any sober thinking person much more an intellectual in not supporying the need for Hydro – power in our country. This will definitely contribute to Economic Development in every sector of our country. Despite what the conyributor may want to argue or debate. The living fact is, all our industries depend on electricity on a daily basis for production. Sir/Madam what do you have as an alternative. I hope not a political party.

  • guyaneseonline  On 03/01/2015 at 2:29 pm

    Dem boys seh…Jagdeo de best thing Donald Duck gat
    Full Story | |

    Jagdeo do this country de gods and when he done he even mek Donald Duck couldn’t win a parliamentary majority. But instead of being once bitten, twice shy, Donald Duck hug de man again like how a man does hug he wife when she go way fuh couple… [read more…]

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