China Railway group given ‘green light’ to build Amaila Falls hydro project

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The China Railway Group Limited, a company that was initially selected to construct the massive Amaila Falls hydropower project in 2012, has once again been granted approval to construct this massive renewable energy project.

According to a press release from the Ministry of Finance, cabinet granted its ‘no objection’ for the Office of the Prime Minister to engage the company. This project will be built on a Build-Own-Operate-Transfer (BOOT) model where the company will supply electricity to the Guyana Power and Light (GPL) Inc. at a cost not exceeding US $0.07737 per kilowatt-hour (KWH).

Earlier on Monday, during a press conference, Vice President Dr. Bharrat Jagdeo stated that with the cabinet’s no-objection, the government would soon move into negotiations with the company.

Further explaining the model the project is being established on, the Vice President said that the government will be buying the power that is generated through from Amaila Falls and not the project itself. Importantly, though, the government will have oversight for the project.

According to reports in the local media, this project is expected to cost just under US $1 billion.

“That’s not coming on our debt as government debt because we are not borrowing to do that,” Dr. Jagdeo clarified, however.

And, the Vice President explained that the government, through the state-owned GPL, can resell the power to consumers for about 15 cents per kilowatt-hour. Currently, consumers pay about 30 cents per kilowatt.

The Finance Ministry release stated that this project will lower the cost of electricity needed to power Guyana’s economic diversification and transformation into a low carbon economy, as well as reduce the cost of power to the businesses and households.

The project is also expected to support initiatives such as the electrification of transport and e-mobility and accelerate the development of a robust ICT sector needed for an interconnected world as well as a competitive manufacturing sector.

This no-objection for the Chinese company follows the publication of a request for proposals by the government in various national newspapers during the period July 25 to August 15, 2021. A total of four companies submitted proposals.

According to the press release, China Railway Group Limited was identified as the “most capable partner” by the Evaluation Committee after a “rigorous” evaluation process. Subsequently, the National Procurement and Tender Administration Board (NPTAB) submitted the relevant recommendation to Cabinet for ‘no objection’.

For context, the Amaila Falls project was first identified in 1976 by the Canadian company “Monenco’ during an extensive survey of hydroelectric power potential in Guyana. In 2009, this project was launched as part of Guyana’s efforts to pursue a more low-carbon future, using less fossil fuels like the heavy oil that GPL currently provides.

The press release highlighted that in 2014, the government earmarked US $80 million earned by Guyana under the Guyana-Norway partnership within the Low Carbon Development Strategy (LCDS) to help finance equity in the project. But, the project was voted down in the National Assembly by the APNU+AFC coalition and eventually, shelved despite a 2016 Norwegian study supporting its merit.

When the current Irfaan Ali -led government was voted into office last year, however, efforts to revive this project got underway. Emphasis has been placed on this project since Guyana’s electricity demand will triple in the next five years and the government is looking to meet the challenge, not by burning more diesel and heavy oil, but through natural gas and hydropower.

With the rolling out of the project now, as the Vice- President explained, no equity contribution from the government is needed. Previously, the government was expected to contribute US $100 million, which the $80 million earned was earmarked for.

On Monday, the Vice- President said that the $80 million sum will now be used for “large solar farms” to be implemented before 2024. No further details were provided.

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