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Falling over the Amaila?
Posted By Stabroek staff On April 19, 2010 @ 5:01 am In Editorial
If it does yield 154 mw of relatively clean and environmental friendly energy, the Amaila Falls hydro project would indeed provide a platform to catapult the economy by taking care of repressed and developing power demand while at the same time drastically reducing dependence on fossil fuels. There is also the promised lowering of the cost of power to consumers so that at face value it would be a win-win situation for all of Guyana.
But like everything else in Georgetown, the deal for the development of the Amaila Falls isn’t straightforward. In actuality it is wrongheaded, murky, nebulous and alarmingly spare in detail. As of this point the frontman for the deal is Guyanese Fip Motilall of Synergy Holdings Inc who by all accounts has been interested in pursuing the Amaila Project since 1997. That it has taken 13 years before this point could even be reached raises some issues about the attractiveness of the deal to investors and the ability of Mr Motilall to convince investors to take it up even though he has blithely spoken of power costs dropping by 50% and an upgrade in the size of the project from 100 mw to 154 mw.
And that is one of the initial reservations that anyone would have with a project of this scale. If the Guyana Government is really interested – as it clearly is – in getting into hydro in a big way then it would not be dealing with Mr Motilall as well meaning as he might be. As part of a well-articulated energy policy, it would have gone directly to the big names in the hydropower business and made a deal attractive enough to them so that a dam would be built on the Amaila in no time with all due consideration to the environment. Instead, the government is dealing with a middleman who clearly doesn’t have the resources to undertake the project and on whom some of the expensive capital for this project would unnecessarily be expended.
Indeed, Synergy was unsurprisingly the winner of what has been described as a US$15M competitive bidding project for access roads et al for the Amaila project. How could it have been a fair process for public tendering when Synergy was in possession of all of the technical information underpinning the project having been interested in it since 1997? This is where a clear definition of Synergy’s role was required. If Synergy was the finder of the project for Sithe Global LLC and was being treated as such in any ensuing deal then it should have been barred from participating in any competitive bidding for any part of the project. At the least, to spare any blushes, all of the information that Synergy had been privy to should have been made available to all of the potential bidders.
It is noteworthy, according to a Ministry of Finance statement, that 17 firms had registered an interest in the roads project but that only four including Synergy had submitted proposals. The other three were local bids and it is passing strange that no overseas bidders followed through. With Synergy in play it might have been apparent to more astute interested parties that there was not much of a chance for them. As is always the case when deserved questions are raised about projects of this type, it was an indignant Head of the Presidential Secretariat, Dr Luncheon who immediately accused critics of a “sinister” agenda and an attempt to cast aspersions on the procurement process. The bottom line however is that it defies conventional wisdom that the initiator of a project worth US$500 to $600M would be permitted to bid for a segment of the project and for this to be considered as fair. It is time that the National Procurement and Tender Administration Board – long shielded by the absence of its commission – be heard from. It should be made to explain how Synergy could have been part of a fair bidding process. There should also be chapter and verse on the projects that Synergy submitted as proof of its ability to upgrade 85 km of roadway, constructing 110 km of virgin roadway through forests, the construction of pontoon crossings at the Essequibo and Kuribrong rivers and the clearing of a pathway along the roadways to allow for the installation of 65 km of transmission lines.
By far the biggest flaw in the arrangements thus far is the failure of the developer of this much vaunted project to show up. Sithe Global Power LLC has been furtively mentioned as the project sponsor – whatever exactly that is – but has not put in an appearance as yet to claim ownership of it. One would have thought that the perfect opening for this deal would have been Sithe signing off in the capital with the major financiers of the project – supposedly the Inter-American Development Bank and a Chinese institution but this has not yet happened. Is there any guarantee that there will be such a deal? Is there any guarantee that Sithe will continue to be interested and will be the right party? Where is the feasibility study that would convince the government and the taxpayers of this country of the wisdom of the project?
Sithe’s website unfortunately lists the Amaila Project as one that is in operation, development and construction all at the same time – clearly an error. Sithe is also relatively young and inexperienced. Its own website says it was formed in 2004 out of the divestitures of Sithe Energies and a year later the Blackstone Group – a major selling point for supporters of the Amaila Project – bought 80% of its shares. That in itself however is no comfort in terms of Sithe’s own capacity to undertake a mega hydro project in the forested interior of Guyana.
And therein lies an enormous danger to the country and its taxpayers. Synergy, about which not nearly enough is known, is being granted a US$15M project to upgrade and build a vast amount of roadway in a sensitive interior location but there is yet to be a conclusion of the deal for the hydro plant. What would happen if in the worst case scenario a deal is not possible? The roads would simply be reclaimed by the forests and the US$15M would be lost? It is most unwise for the government to proceed in this wrongheaded manner with as important a project as this.
Further, considering the number of years since the initial environmental impact assessment for the project was done (2001) and the changed circumstances since, a fresh EIA should be mandatory before any work gets underway, whether it be preparation of the roads or work on the actual hydro site.
The famous fiasco with the Upper Mazaruni hydro project has long been cited as the epitome of the PNC’s failure to grapple with large-scale projects and attendant multilateral funding issues. As unlikely as it seems, the PPP/C government is veering in a similar direction and there is a risk of it falling over the Amaila unless there is a swift, clear and cost beneficial deal for the construction of the hydropower project.
Nota del editor del blog: Al referenciarse a la República Cooperativa de Guyana se deben de tener en cuenta los 159.500Km2, de territorios ubicados al oeste del río Esequibo conocidos con el nombre de Guayana Esequiba o Zona en Reclamación sujetos al Acuerdo de Ginebra del 17 de febrero de 1966.
Territorios estos sobre los cuales el gobierno Venezolano en representación de la Nación venezolana se reservo sus derechos sobre los territorios de la Guayana Esequiba en su nota del 26 de mayo de 1966 al reconocerse al nuevo Estado de Guyana .
“...por lo tanto, Venezuela reconoce como territorio del nuevo Estado, el que se sitúa al este de la margen derecha del río Esequibo y reitera ante la comunidad internacional, que se reserva expresamente sus derechos de soberanía territorial sobre la zona que se encuentra en la margen izquierda del precitado río; en consecuencia, el territorio de la Guayana Esequiba sobre el cual Venezuela se reserva expresamente sus derechos soberanos, limita al Este con el nuevo Estado de Guyana, a través de la línea del río Esequibo, tomando éste desde su nacimiento hasta su desembocadura en el Océano Atlántico...”
Falling over the Amaila?
Posted By Stabroek staff On April 19, 2010 @ 5:01 am In Editorial
If it does yield 154 mw of relatively clean and environmental friendly energy, the Amaila Falls hydro project would indeed provide a platform to catapult the economy by taking care of repressed and developing power demand while at the same time drastically reducing dependence on fossil fuels. There is also the promised lowering of the cost of power to consumers so that at face value it would be a win-win situation for all of Guyana.
But like everything else in Georgetown, the deal for the development of the Amaila Falls isn’t straightforward. In actuality it is wrongheaded, murky, nebulous and alarmingly spare in detail. As of this point the frontman for the deal is Guyanese Fip Motilall of Synergy Holdings Inc who by all accounts has been interested in pursuing the Amaila Project since 1997. That it has taken 13 years before this point could even be reached raises some issues about the attractiveness of the deal to investors and the ability of Mr Motilall to convince investors to take it up even though he has blithely spoken of power costs dropping by 50% and an upgrade in the size of the project from 100 mw to 154 mw.
And that is one of the initial reservations that anyone would have with a project of this scale. If the Guyana Government is really interested – as it clearly is – in getting into hydro in a big way then it would not be dealing with Mr Motilall as well meaning as he might be. As part of a well-articulated energy policy, it would have gone directly to the big names in the hydropower business and made a deal attractive enough to them so that a dam would be built on the Amaila in no time with all due consideration to the environment. Instead, the government is dealing with a middleman who clearly doesn’t have the resources to undertake the project and on whom some of the expensive capital for this project would unnecessarily be expended.
Indeed, Synergy was unsurprisingly the winner of what has been described as a US$15M competitive bidding project for access roads et al for the Amaila project. How could it have been a fair process for public tendering when Synergy was in possession of all of the technical information underpinning the project having been interested in it since 1997? This is where a clear definition of Synergy’s role was required. If Synergy was the finder of the project for Sithe Global LLC and was being treated as such in any ensuing deal then it should have been barred from participating in any competitive bidding for any part of the project. At the least, to spare any blushes, all of the information that Synergy had been privy to should have been made available to all of the potential bidders.
It is noteworthy, according to a Ministry of Finance statement, that 17 firms had registered an interest in the roads project but that only four including Synergy had submitted proposals. The other three were local bids and it is passing strange that no overseas bidders followed through. With Synergy in play it might have been apparent to more astute interested parties that there was not much of a chance for them. As is always the case when deserved questions are raised about projects of this type, it was an indignant Head of the Presidential Secretariat, Dr Luncheon who immediately accused critics of a “sinister” agenda and an attempt to cast aspersions on the procurement process. The bottom line however is that it defies conventional wisdom that the initiator of a project worth US$500 to $600M would be permitted to bid for a segment of the project and for this to be considered as fair. It is time that the National Procurement and Tender Administration Board – long shielded by the absence of its commission – be heard from. It should be made to explain how Synergy could have been part of a fair bidding process. There should also be chapter and verse on the projects that Synergy submitted as proof of its ability to upgrade 85 km of roadway, constructing 110 km of virgin roadway through forests, the construction of pontoon crossings at the Essequibo and Kuribrong rivers and the clearing of a pathway along the roadways to allow for the installation of 65 km of transmission lines.
By far the biggest flaw in the arrangements thus far is the failure of the developer of this much vaunted project to show up. Sithe Global Power LLC has been furtively mentioned as the project sponsor – whatever exactly that is – but has not put in an appearance as yet to claim ownership of it. One would have thought that the perfect opening for this deal would have been Sithe signing off in the capital with the major financiers of the project – supposedly the Inter-American Development Bank and a Chinese institution but this has not yet happened. Is there any guarantee that there will be such a deal? Is there any guarantee that Sithe will continue to be interested and will be the right party? Where is the feasibility study that would convince the government and the taxpayers of this country of the wisdom of the project?
Sithe’s website unfortunately lists the Amaila Project as one that is in operation, development and construction all at the same time – clearly an error. Sithe is also relatively young and inexperienced. Its own website says it was formed in 2004 out of the divestitures of Sithe Energies and a year later the Blackstone Group – a major selling point for supporters of the Amaila Project – bought 80% of its shares. That in itself however is no comfort in terms of Sithe’s own capacity to undertake a mega hydro project in the forested interior of Guyana.
And therein lies an enormous danger to the country and its taxpayers. Synergy, about which not nearly enough is known, is being granted a US$15M project to upgrade and build a vast amount of roadway in a sensitive interior location but there is yet to be a conclusion of the deal for the hydro plant. What would happen if in the worst case scenario a deal is not possible? The roads would simply be reclaimed by the forests and the US$15M would be lost? It is most unwise for the government to proceed in this wrongheaded manner with as important a project as this.
Further, considering the number of years since the initial environmental impact assessment for the project was done (2001) and the changed circumstances since, a fresh EIA should be mandatory before any work gets underway, whether it be preparation of the roads or work on the actual hydro site.
The famous fiasco with the Upper Mazaruni hydro project has long been cited as the epitome of the PNC’s failure to grapple with large-scale projects and attendant multilateral funding issues. As unlikely as it seems, the PPP/C government is veering in a similar direction and there is a risk of it falling over the Amaila unless there is a swift, clear and cost beneficial deal for the construction of the hydropower project.
Nota del editor del blog: Al referenciarse a la República Cooperativa de Guyana se deben de tener en cuenta los 159.500Km2, de territorios ubicados al oeste del río Esequibo conocidos con el nombre de Guayana Esequiba o Zona en Reclamación sujetos al Acuerdo de Ginebra del 17 de febrero de 1966.
Territorios estos sobre los cuales el gobierno Venezolano en representación de la Nación venezolana se reservo sus derechos sobre los territorios de la Guayana Esequiba en su nota del 26 de mayo de 1966 al reconocerse al nuevo Estado de Guyana .
“...por lo tanto, Venezuela reconoce como territorio del nuevo Estado, el que se sitúa al este de la margen derecha del río Esequibo y reitera ante la comunidad internacional, que se reserva expresamente sus derechos de soberanía territorial sobre la zona que se encuentra en la margen izquierda del precitado río; en consecuencia, el territorio de la Guayana Esequiba sobre el cual Venezuela se reserva expresamente sus derechos soberanos, limita al Este con el nuevo Estado de Guyana, a través de la línea del río Esequibo, tomando éste desde su nacimiento hasta su desembocadura en el Océano Atlántico...”
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