SITHE Global, the developer of the Amaila Falls Hydroelectric Project, is eyeing financial closure by the third or fourth quarter of this year; and with 40 months of construction time, commissioning of the project by 2015. The subsidiary company in Guyana, Amaila Falls Hydro Inc, Wednesday held a consultation meeting at the Tower Hotel at which stakeholders had a chance to make their comments on aspects of the project’s development that could affect them.
Speaking to the Guyana Chronicle in a short interview before the meeting, Sithe Global’s Senior Vice President of Development, Jim McGowan, explained the funding arrangements for the groundbreaking project, touted as one that will lift the country from its dependence on fossil fuel for electricity generation.
“Right now we are negotiating with two lenders, the Inter-American Development Bank (IDB) and the China Development Bank (CDB), and Sithe Global would be putting in the majority of the equity for the project. Right now we are [covering 30 percent] of the project cost as our equity, with [debt financing coming from] IDB and CDB together,” he said.
The Government of Guyana is also lending its support to the project by providing equity financing from funds earned through Guyana’s Memorandum of Understanding with the Kingdom of Norway.
According to McGowan, the exact amount of the debt that each one of the financial institutions [provides] is still the subject of negotiation.
“The amount of the project financing we estimate to be between US$650M to US$700M. We are right now hoping to close financing by the third or fourth quarter of this year. We still need to complete several things, including the environmental and social assessment – which this meeting is a part of – and arrange for the final financing and documentation to close,” McGowan said.
He explained that about US$325M of the project sum would be for the construction of the hydro project itself. “About US$130M of that will be for the transmission lines. Often people who are criticising the price of the plant don’t realise that there is a whole other project in the transmission lines. The transmission line is a major infrastructural improvement in the country and really a future investment in the Guyanese infrastructure,” he said.
Speaking at the meeting, CEO of the Guyana Power and Light (GPL), Bharat Dindyal, said that the consultation offered an opportunity for people to have niggling issues about the project clarified. GPL will be the purchaser of the electricity that the Amaila project generates.
“It is confirmed now that the installed capacity of the project is 165 megawatts, but they are guaranteeing us [140 megawatts] at the delivery point. We are paying for power that they [will be] delivering to us at Linden and Sophia. Based on current projections, we should not have a difficulty utilising the power [because] we are seeing healthy growth…in fact last year we saw 6.8 percent [in demand] over 2009,” he said.
He noted that there is every expectation that the growth in power demand will continue, given the progress being recorded in the country. “When [Amaila] achieves commercial operation in 2015, we will be ready. Our network will be ready and the market will be there to absorb the electricity. So we don’t foresee any difficulties,” he declared.
However, he said GPL’s main concern remains the project’s achieving commercial operations by 2015. As far as how the project will affect the final cost to the consumer, Dindyal said a number of factors still need to be addressed. “Based on where fuel prices are today, and where is it forecast to be in 2015, definitely the prices that they are projecting now [may not apply],” he said.
He said however, based on several factors, GPL has determined that the electricity generated by the hydro project will be less expensive than what the company generates presently. “But it is a bit too early to forecast with any degree of accuracy,” said Dindyal when asked to give the final cost to the consumer.
Dindyal said that the company will continue to maintain its diesel generation capacity ‘just in case’. “We currently have 162 megawatts installed capacity. Current forecasts project that the hydro’s capacity will drop from the 140 megawatts for about three months in the year,” he said.
Dindyal said there is a study that a consultant is doing at present to try to rationalise current weather phenomena, noting that the hydrology for the hydro project is based on 50 years of information obtained locally.
“We have now El Nino and La Nina. What we are seeing is excessive rainfall or extended periods of dry seasons, so the consultant is trying to see how these phenomena will affect hydrology of the site. That will probably help GPL to do a better assessment of the exposure we will have on the hydrology, and we would be able to advise our principals as to what we should do in terms of generating capacity here,” Dindyal explained.
The project is a planned 165 facility located at the confluence of the Amaila and Kuribrong Rivers in western Guyana, Region 8. The Government of Guyana and various international partners are working in collaboration to develop the project.