Jun 23, 2014 News
Sithe Global/Blackstone Withdrawal from the Amaila Falls Project
My Fellow Guyanese, I take this opportunity to let you know that the partners we have been working with, to develop the Amaila Hydro Project, Sithe Global/Blackstone, have withdrawn from this project. They took this decision after numerous efforts by the Government, national stakeholders and the two companies themselves to obtain Parliamentary Opposition support, but failed.
This Government had placed this project as the highest priority after the 2011 general and regional elections as no one needs convincing that cheaper energy is indispensable to faster and greater advancement of our economy and country, moving Guyana from a commodity/agricultural based economy to one that manufactures value added products. I cannot over-emphasise the fact that a successful Hydro project will bring direct and indirect benefits to every single Guyanese.
As was demonstrated after the most rigorous examination of the Amaila Project, the cost of electricity for both domestic and commercial consumers would fall by 40 percent in the first instance of hydro power-generation. It will then fall by 71 percent and in twenty years would fall by 91 percent of today’s cost.
Moreover, Guyana would have saved billions of US dollars of its expenditure on fuel importation used to generate electricity. We would also save the subsidy to GPL which was $6billion last year. This money would have been available to be used to provide more, better and higher quality of goods and services in order to improve the welfare and quality of lives of all Guyanese.
My fellow Guyanese, cheap energy is vital to the industrialisation of Guyana. Industrialisation would create thousands of high quality jobs for all Guyanese, particular our young people.
I would like to let you know that we exerted great efforts to stress the importance of this project to the opposition parties and to all stakeholders in the country. Sadly the opposition remained unconvinced.
In March 2012, a few months after assuming the Presidency in 2011, I invited the two opposition parties in Parliament, the APNU and the AFC to the Office of the President to give them a presentation on the Amaila Hydro Falls Project and its status to date. I asked our technical staff to give that presentation. It was agreed that the opposition parties would take two weeks to go through the documents provided and then to have follow up discussions on their concerns.
I emphasised to the opposition leaders that their buy-in was critical to the success of this, the largest single transformative project ever undertaken in the history of our nation. I mentioned that I did not want to taint this project in wild charges of corruption. Finally, I made it clear that we were ready to answer any question and provide as much information as we could to satisfy their concerns.
At that same meeting, we offered to give them similar presentations on any of the other major projects we had on-going or in the pipeline – I asked them if they were interested to let me know. I never heard from them on any of these projects.
In that same year, Sithe Global also met the leaders of the opposition and gave them a presentation on this project as well. Both Sithe and the Government also briefed the private sector.
During the debate on the estimates of the 2012 Budget, our ministers, including the Prime Minister and the Minister of Finance answered exhaustively every question put to them by the opposition on this project. This was repeated in the 2013 Parliamentary Budget Debate.
In June of this year, I once again invited the Opposition Parties in Parliament to another presentation to give them updates and developments with regards to the project. The AFC declined the invitation, so the presentation was made to the APNU delegation.
We also shared with them other agreements that were commercially confidential so that there could be full-disclose and they could have a full picture of where and what were the critical stages on the project. They were also advised on the two parliamentary interventions that would have to be submitted and supported in order to conclude the financing of this project. Copies of the Hydro-Electric Power Bill and the motion on the increasing of the debt ceiling in order to guarantee the investment were shared with the opposition delegation. Although the AFC was not present they too received the volumes of documents shared with the APNU.
On June 13, 2013, the bill and motion were laid in the National Assembly.
On June 28, 2013, the opposition parties asked that we defer the debate on these two matters which we agreed to whilst warning that timelines had to be met.
The Government even asked the Inter-American Development Bank to meet with the opposition parties and bring them up-to date with the developments on the Project and what were the critical junctions and timelines to be met in terms of keeping the project alive. Two such meetings were held.
Despite these efforts on July 18 the AFC and APNU voted against the bill and motion. It was clear that Amaila was now in jeopardy.
The Government, unwilling to see this major national undertaking squashed held a National Stakeholders Forum on July 25 with over 300 representatives from the labour movement, the business community, religious and faith based organisations, women, youth and Amerindians. The Forum concluded with a declaration calling on the opposition parties to support the project.
Additionally, we invited Sithe Global and Blackstone to come to Guyana to speak with the Parliamentary Opposition and the public at large to answer and allay any misleading and ill-conceived theories that were being fed to the public by some of the opposition anti-government commentators and “experts”.
Sithe Global and Blackstone met privately with the opposition parties on July 31, 2013, in the Parliament Chambers and held a public consultation later on the same day at the Guyana International Conference Centre.
Fellow Guyanese, there has been considerable confusion in recent weeks concerning the cost of the Amaila Falls Project to be borne by Guyana.
Let me clarify, the total cost to the taxpayer is US$100 million in equity, of which US$15million has already been spent and (US80 million) of the remainder is already deposited in the GRIF and is awaiting transfer. The future cost to the taxpayer is limited to the outstanding amount needed for the access road.
– The total savings to the taxpayer because of the removal of GPL’s subsidy will be at least US$30 million per year, or US$600 million over twenty years – far in excess of the US$100 million provided by the tax payer in equity.
– The total reductions to the consumer tariff will decrease because of Amaila Falls.
The total public debt for Amaila Falls is zero – this fact has been lost the most in the majority of recent media coverage.
After twenty years, Amaila Falls will be 100% owned by Guyana, and is expected to last for a hundred years.
My Fellow Guyanese, I have gone into details on these efforts so that you can be well informed. The Opposition parties cannot say that there was not full disclosure or that they were not fully engaged on this project. They were privy to exactly the same information that the Government had.
I must also stress that labour and private sector bodies were active in discussing the merits of this project to Guyana and in meeting with the Parliamentary opposition parties calling on them to support the project.
Yet on August 7, 2013, when the bill and amended debt ceiling motion were returned to the National Assembly the APNU voted against it.
For the first time the AFC voted for the bill but not before slashing the debt ceiling guarantee from $130 billion to $50 billion. This is even after we acceded to their request to confine the debt ceiling to only the Amaila Falls Project. Unfortunately, the AFC did too little too late.
Sithe Global and Blackstone wanted full Parliamentary support for this project because of the magnitude of their investment. Because of the lack of support from all the opposition parties, the country has lost the prestigious international partners’ support.
My Fellow Guyanese we were so close to being in a position of reaching growth rates of more than 10 percent per annum. This investment alone would have been approximately 25 percent of GDP.
By their short-sighted position and a clear reluctance or inability to rise above narrow political agendas to support national policies, the opposition has put Guyana in danger of losing much more money.
The US$ 80 million dollars we have earned by selling Carbon Credits to Norway is in real danger of being lost since this was to be ploughed into this project as our equity. At the same time we have expended US $15 million of our own money on doing preparatory work. Much of this it should be noted was approved by the joint opposition in the 2012 budget. Now with their rejection of support for this project they have in essence wasted these funds.
I want to thank all of you who supported this project and urge that you remain committed.
My Fellow Guyanese, I want you to know that I will continue to work to get cheaper energy for Guyana. I will continue to try to convince investors to stay on and invest in this project and in this country and I still hope that the opposition (particularly the APNU) could see the bigger picture and that they would put the interests of our people above narrow party lines and rise to the call to support this project.
August 12, 2013
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