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MINISTER of Finance, Dr. Ashni Singh, yesterday tabled a motion in Parliament to increase the limit on total guarantees that can be issued under The Guarantee of Loans (Public Corporations and Companies) Act. The new proposed limit is G$150 Billion or approximately US$730M. The guarantee limit was last raised in 1980 from $500 million to $1 billion dollars. Based on the US Dollar exchange rate in 1980, the guarantee at that time was equivalent to US$400 million. Adjusted for US inflation from 1980 to 2013, the equivalent figure in US$ today would be approximately US$1.1 billion.
The increase in the guarantee limit follows on the Government’s commitment to the Amaila Falls Project and guaranteeing that GPL honours its financial commitments under the Power Purchase Agreement (PPA) to be entered into between GPL and Amaila Falls Hydro Inc (AFHI). Under the PPA, GPL commits to purchase the power from Amaila for an average annual capacity payment.
Government’s obligation is in the form of a Performance Guarantee. According to a statement from the Ministry of Finance, the Performance Guarantee is not a guarantee of debt but rather a guarantee of GPL’s obligations under its Power Purchase Agreement (PPA) to pay for power delivered from the hydro facility.
GPL expects when the Amaila Falls project comes online in 2017, to receive over 1,000 gigawatt hours (GWH) of power and to save approximately US$200 million annually in avoided fuel cost in exchange for paying on average, an estimated amount of US$100 to US$110 per annum over concession period (20 years). The Amaila Falls project will revert to GPL/Government at the end of the concession period at no cost. The Amaila Falls hydro project is expected to have a life of approximately 75 years.
The Government has shared the commercial agreements governing the transaction on a confidential basis with the APNU, including the PPA, which details GPL’s obligations.
The Government said it looks forward to continuing discussions with the Opposition on the details surrounding the transaction and expects to have further meetings with the Opposition prior to bringing the proposed motion to a vote.
It is expected that the motion will be debated shortly in the National Assembly. Government is optimistic that based on the consultations with the opposition, the motion will receive the unanimous support of the Assembly.
The increase in the guarantee limit follows on the Government’s commitment to the Amaila Falls Project and guaranteeing that GPL honours its financial commitments under the Power Purchase Agreement (PPA) to be entered into between GPL and Amaila Falls Hydro Inc (AFHI). Under the PPA, GPL commits to purchase the power from Amaila for an average annual capacity payment.
Government’s obligation is in the form of a Performance Guarantee. According to a statement from the Ministry of Finance, the Performance Guarantee is not a guarantee of debt but rather a guarantee of GPL’s obligations under its Power Purchase Agreement (PPA) to pay for power delivered from the hydro facility.
GPL expects when the Amaila Falls project comes online in 2017, to receive over 1,000 gigawatt hours (GWH) of power and to save approximately US$200 million annually in avoided fuel cost in exchange for paying on average, an estimated amount of US$100 to US$110 per annum over concession period (20 years). The Amaila Falls project will revert to GPL/Government at the end of the concession period at no cost. The Amaila Falls hydro project is expected to have a life of approximately 75 years.
The Government has shared the commercial agreements governing the transaction on a confidential basis with the APNU, including the PPA, which details GPL’s obligations.
The Government said it looks forward to continuing discussions with the Opposition on the details surrounding the transaction and expects to have further meetings with the Opposition prior to bringing the proposed motion to a vote.
It is expected that the motion will be debated shortly in the National Assembly. Government is optimistic that based on the consultations with the opposition, the motion will receive the unanimous support of the Assembly.
