– VP Jagdeo says Govt not budging on BOOT model
The Amaila Falls Hydropower Project (AFHP) is at risk of being retendered and delayed, as China Railway First Group (CRFG), the company that won the contract, has informed the Government that it has difficulties meeting the contract obligations and wants the model changed.
The Amaila Falls Hydro Project The award of the contract to CRFG on a Build-Own-Operate-Transfer (BOOT) model was announced in November of last year. Vice President Bharrat Jagdeo during a press conference on Monday revealed that the company now wants to enter an Engineering, Procurement and Construction (EPC) contract with the Government.
“Amaila, we’ve been in discussions with the company since November. The negotiations are very difficult. And as of April 22nd, they wrote us saying they’re having a hard time doing the BOOT contract and they want to shift to an EPC+ finance, that the Government finances the project and they would be the EPC contractor,” Jagdeo said.
“We’re in the negotiations. We’re still trying. Because to get them to meet the commitment that they bid for. But you know how this started. With Sithe Global, which is a subsidiary of Blackstone, choosing China Railways. And then the project didn’t go through, we retendered. And they came out at about 7.7 cents per kilowatt.”
According to Jagdeo, the Government is not in agreement with any attempts to change the basis of the tender that went out last year. He made it clear that if they cannot get the contract done under the BOOT model, then it will have to be scrapped and retendered. He made it clear, however, that other projects such as the gas-to-shore project and the solar panels are on course.
“We will not be able to conclude the contract, because that is what the tender was about, a BOOT model, not an EPC model. And so, in the last six months or so, we’ve been struggling to reach an agreement. We’re now going to have to give a deadline and cancel if they can’t proceed with the original model.”
“So, we may have a set back there, but on the solar panels. Remember that is our money. That 35 megawatts will go out to tender very soon. That is for Linden/Essequibo and Berbice… so (Amaila) may be a setback, but on the other hand we’re moving full steam ahead.”
It was explained that one of CRFG’s main stumbling blocks to achieving the terms in the BOOT contract, is finance. Jagdeo also noted that the Government has not opted to move on to the next responsive bidder, since that bid had been at 9.9 cents per kilowatt… significantly more than CRFG. As such, no decision was made to move on to this bidder.
According to the Vice President, there is also a possibility that the timelines previously set to start construction on the AFHP, may have to be pushed back. However, he stressed that this will not impact the Government’s commitments to drop the price of electricity by 50 per cent.
“We will definitely have to revise timelines. We’ll have to, it depends on what will happen. But that will not affect, in any case, our commitment to drop the price by 50 per cent. Because the commitment was on the basis of the power supplied from the gas to energy project. So that timeline is very strong, dropping the price of power by 50 per cent by 2024, as soon as that one gets (implemented).”
Construction on the Amaila Falls Hydropower Project (AFHP) was supposed to start this year, as Government continues to ramp up spending on renewable energy projects as well as upgrades to the Guyana Power and Light (GPL) infrastructure. The expected completion date was to be 2027.
The AFHP will be based on a Build-Own-Operate-Transfer (BOOT) model where the company will supply electricity to GPL Inc at a cost not exceeding US$0.07737 per kWh and where the company will provide the entire equity required by the project and undertake all the risks associated with the project.
The revival of the 165-megawatt AFHP was one of the promises made by the People’s Progressive Party/Civic in its manifesto. The project was initiated under the previous PPP/C Administration but was scrapped by the coalition Administration which had controlled the National Assembly by a one-seat Opposition majority.
The AFHP was the flagship of Guyana’s Low Carbon Development Strategy (LCDS).
Amaila was expected to deliver a steady source of clean, renewable energy that would have been affordable and reliable, and was envisioned to meet approximately 90 per cent of Guyana’s domestic energy needs while removing dependency on fossil fuels.
The AFHP was first identified in 1976 by the Canadian company Monenco during an extensive survey of hydroelectric power potential in Guyana. Various studies have since justified and strongly supported the construction of the AFHP.