Addressing the closing of the 2013 National Economic Forum at the Guyana International Conference Centre (GICC), Jagdeo said claims by critics like Accountant, Christopher Ram, Former Auditor General, Anand Goolsarran and Analyst, Ramon Gaskin that the project would have piled more debt on Guyana were unfounded.
“There is not a single cent of debt, outside of the money that we are spending on the road and the equity, that we are taking that will accrue to this country and yet we heard that is too high a debt that we are worried about that’s why we didn’t approve the project,” he said.
Outside of the estimated US$20 million that government has spent on building the road to the site of the power plant and equity in the Amaila Falls Hydropower Inc; he reiterated that the project would not have cost the country any additional debt burden.
The Russian-trained economist accused those who projected various amounts of national indebtedness of engaging in “charlatan economics” and reiterated that the cost of electricity would have decreased from Year 1 to Year 20 by which time the plant would have been transferred to the Guyana government’s ownership.
Although the United States-based Sithe Global/Blackstone has pulled out and refused to invest US$150 million because of a lack of political consensus, government and the business community have been rallying calls for A Partnership for National Unity (APNU) to support what would have been the single largest investment in Guyana’s history.
Sithe Global wanted a 19 percent rate of return on its investment while the Inter American Development Bank’s (IDB) UDS$100 million loan to AFHI was expected to attract a 9 percent interest rate and US$500 million from China Development Bank (CDB) would have been at little more than a seven percent interest rate.
Jagdeo, who is also a former Finance Minister, noted that the debt ceiling was being increased to GUY$150 billion to guarantee payments for electricity if the loss-making Guyana Power and Light (GPL) was unable to pay AFHI for electricity supply. “…not a single cent of debt and they killed the hydro on the basis of that,” he said.
With the United States (US) pushing for a lid on greenhouse gas emissions, Jagdeo forecast that Guyana’s cost of electricity could go up by at least 5 US cents per kilowatt hour because Washington would most likely introduce a carbon tax or carbon trading system.
Jagdeo noted that Guyanese were currently paying 20 US cents per kilowatt hour, but Prime Minister Samuel Hinds had told the Parliamentary Committee on Economic Services that Guyanese were paying US 31 cents. Hinds has said that when electricity from AFHI reached Georgetown it was expected to cost about 12 US cents per kilowatt hour. However, consumers would have to pay around 18 to 19 US cents to take account of 32 percent losses.
“We can’t keep shooting ourselves in the foot. This project should have been above politics because we tried a long time (to get a hydropower plant),” he said, adding that Guyana lost a “real chance” to become competitive.
APNU Shadow Finance Minister, Carl Greenidge, however, said the project could be possibly rescued if government agreed to an independent assessment of the feasibility of the project.
“Let an independent authority tell us that from what they have seen with the numbers that the price will come down….and confirm that GPL’s price will come down,” he said.
Among APNU’s key concerns is whether the inefficiently managed GPL could pay AFHI for electricity over the 20 year life of the project. Greenidge also queried what the other power options were because AFHI’s generation would have been full absorbed soon after its construction. Government has acknowledged that it would have to search for additional energy sources.
Greenidge argued that when all the financial transactions and construction and overhead costs were added, AFHI would have been the most expensive hydropower project in the world. “Right now is the most expensive new hydro on the block anywhere in the world,” he said. He said the more than US$5 million per megawatt at AFHI was way above global estimates.