The Amaila Falls during one of its dry spells in 2013
The Guyana Power and Light Incorporated (GPL) in addition to agreeing to purchase all of the power to be delivered to Georgetown from the 156 megawatt (MW) Amaila Falls Hydro Electric Plant has also agreed to assume the hydrological risks involved in the project.
As such, it would mean that GPL would bear the incurred liability whenever the Amaila Falls runs dry or if the 23 square kilometres reservoir is unable to feed the hydro plant.
This is according to Project Head, Winston Brassington, when he provided an update on the project for stakeholders at the recently concluded Energy Conference and Expo, venued at the Marriott Hotel in Kingston.
Addressing the conference, Brassington told those in attendance, “like any large projects there is a lot of risk in these projects but most of these risk have been put to the developer.”
GEOTECHNICAL RISKS:
He did note however, that when it comes to the geotechnical risk “we are going to stay with the same structure we had in 2012; the hydrology risks GPL will be assuming this, the contract provide for allocation of force majeure risk” and that GPL will take all of the power from the project.
Hydrological risk is generally seen, as the risk of having insufficient water in the source river or dam to support the expected levels of electricity generation as had been the case in the past with the Amaila Falls which runs dry during the course of the year. As such, it would mean that in the event the falls runs dry during the course of its hydro plant’s operation, GPL will have to assume all of the risk involved.
As it relates to the force majeure, this too will be borne by the government of Guyana in the event of something caused by the state, or in the event of natural causes would be borne by both parties.
Government, he said, would only be guaranteeing the performance of GPL.
According to Brassington, the new iteration of the 165MW project will be coming in cheaper than its 2012 price tag, when the then project developers—the Blackstone Group—walked away from.
At the time, the reported price was pegged at in excess of US$1B but, according to Brassington, this time around, the project is earmarked to cost some US$700M.
The financing for the project this time, according to Brassington, will be borne by the contractor – China Railway First Group, and will include the installation of some 270 kilometres of transmission lines, which he said would run from the Amaila Falls to the Sophia Substation.
Included in the new project scope, according to Brassington, is the upgrade of the Amaila Falls Access Road, two substations—one in Linden and another in Georgetown.
Insisting that Guyana has not made any other financial commitments to the project, other than to pay for power when it arrives in Georgetown, Brassington said that the Chinese contractor is expected to put in the finances in part from Chinese institutions.
Being pursued under a Build Own Operate Transfer (BOOT) model, Brassington related that the contractor will have to establish a Special Purpose Vehicle (SPV) in which the owner—China Railway—will assume all of the debts and equity and that power will be purchased by the Guyana Power and Light Inc. (GPL).
“GPL will buy all of the power under a PPA (Power Purchase Agreement),” and the contractor will have to assume the majority of the risks in the project, he said.
According to Brassington, all of those that had submitted proposals with the intention of pursuing the project had been given copies of every bit of information and documentation at the government’s disposal.
These include, according to Brassington, all of the feasibility and other studies undertaken in relation to the project such as hydrology surveys and others.
Under the BOOT arrangement, Brassington said Guyana would, in 20 years’ time, take over ownership of the project.
He did, during his presentation, seek to point out that during the three-and-a-half-year period expected for construction, an independent supervision firm would be hired by the administration to ensure the hydroelectric plant is built to specifications. This is in addition to the recruitment of an Operations and Management consultant. With Guyana taking ownership of the project 20 years after commissioning, Brassington noted that the project’s average price measured over that time period would be about 7.7 cents which is largely going towards the repayment of the US$700M financing.
According to Brassington, the project will be funded by China Rail and Chinese institutions. They will own the project and it will be operated under a concession for 20 years.
At end of the 20 years, he said, it will be handed over to government at no cost and as such “I think this a great project.”
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Comments
It will be a miracle, if the Hydro project,including the transmission lines are completed for under 1.2 Billion US dollars.Chinese companies always bid low and then renegotiate for substantial add on in cost,which will be very difficult for government to reject especially with a BOOT project. Can Mr Brassinton, explain what is in place in the contract, to prevent an increase in cost, exceeding , a 10% general, possible add on. Is there a State Paper, to be placed before Parliament, for approval, as is the custom,with these Mega Projects.?Also the same querry on the Gas to Shore Project,please.Both projects are vital it seems, because of forcasted threefold increase in power requirement needed in Guyana,by 2026.It seems ,it is forecasted that some 400 MW,+ power will be needed,by that time.
Why do our governments continue to treat Guyanese, like total dunces, only capable of voting for their ethnicity, and then dumped, back into peasants that have no need to understand, what the new and continuing Master Class, that we Guyanese have created in the 56 years since Independence, plan for Guyana.
If a government, any government, wishes truly to be fair,honest and transparent, ,they should do so by letting the people know the nessecity, and costing of the Mega, and other large , projects. Most of us are well educated you know, especially in our huge diaspora in foreign lands. Those who not understand, will seek help from those that do, who will simplify the text for them.
When Government after government continue to treat Guyanese, as election fodder, it shows total disrespect for us.If you refuse to be transparent, it means there is something to hide,and always when there is smoke,there is always fire,(read corruption).SO let this government,treat all Guyanese with respect, and be the first to do so. Keep us informed, and do listen ,and reply to our questions and queries.
You know if you accept a slap in the face, you must be prepared for kick in the crotch.A friend of mine explained Guyanese lack of concern, could be cause by the barrel generation, now mature, and in leading positions, but walking around with a feeling of entitlement, which exposes their willingness to be bought off.
Guyanese should have been out in the streets a long time ago, reminding politicians, they work FOR the people.Hope is not too late. Sad so sad.