Prof. Thomas, Greenidge insist that Amaila is bad; Ramotar invites Granger to settle concerns

Last Updated on Saturday, 26 December 2015, 21:01 by GxMedia

Even as Economics Professor Clive Thomas was Friday night justifying opposition claims that Guyanese will not pay less for electricity from the Amaila Falls Hydropower plant, President Donald Ramotar urged Opposition Leader David Granger to return to the negotiating table.

The Guyanese leader agreed with A Partnership for National Unity’s (APNU) Granger that the “two most important issues” were that Amaila Falls project was likely to condemn Guyanese to excessive indebtedness and that the cost of electricity would not be appreciably lower than the current tariff.

Against the background of those concerns, Ramotar invited Granger and his team to hold talks with government on those matters the Head of State said “are easy to resolve.”

“To help build consensus on these two outstanding points, I suggest that Mr. Granger’s team and a team from the Government meet to once and for all settle these issues, and to publicly communicate the meeting’s outcomes,” said Ramotar in a statement.

“After the meeting, if Mr. Granger and his team agree that both their stated concerns are being met, then Guyana can put the rancour of recent weeks behind us, and forge a strong, unified, national consensus in favour of the Amaila Falls project,” he added.

Ramotar’s latest effort follows the decision by the New York-based power generation company, Sithe Global, to pull out of the project because there has been no political consensus. Analysts say the company fears that a future government may renegotiate the deal or nationalize the company.

The President made it known that Granger has told him APNU would change its position on Amaila if their outstanding issues were resolved. He further recalled that Granger has said privately and publicly that APNU would have been stating those issues publicly through a definitive press statement last Monday. APNU on Sunday had issued invited the media to an emergency news conference the following day.

The smaller opposition Alliance For Change (AFC) has voted conditionally to increase the debt ceiling by GUY$50 billion instead of the GUY$150 billion as a contingent liability should GPL fail to pay AFHI for electricity generated. AFC has also voted in favour of extending a zone around Amaila to help minimize the environmental impact of the hydropower plant and preserve the ecosystem.

The President reiterated that Guyana would not be accruing additional debt and that the Guyana Power and Light (GPL) will in the first instance pay 40 percent less for Amaila-generated electricity and by over 70 percent for the eight years after that and by over 90 percent for the eighty years after that. He further explained that: A pass-through of the remaining savings to the consumer, which will result in a reduction of over 20 percent in the electricity bills of Guyanese businesses and consumers within two years of the start of Amaila’s operations – and significantly more in the years ahead as GPL’s tariff gets progressively cheaper (unlike with oil and diesel, Amaila’s electricity price decreases dramatically over time). The pass-through of GPL’s progressively cheaper tariff can lead to reductions in the consumer tariff well in excess of 50 percent of today’s price after twelve years.

Prime Minister Samuel Hinds has told a parliamentary sectoral committee on economic services that GPL was expected to supply Amaila-generated power to consumers at 19 cents per kilowatt hour.

But Professor Thomas, speaking at a Working Peoples Alliance (WPA)-organised forum on the Amaila Falls Hydropower Project, argued that if the US$858 million facility was built, Guyanese would pay more rather than less for electricity. He said he has seen figures that show that GPL would have to more than double the 11 US cents per kilowatt hour it is projecting to pay AFHI. He said government hopes to yield a price reduction of 23 percent for the A, B and C categories and 13 percent for category D. “This suggests to me that the add-on costs to the add-on costs to the Amaila Hydro costs constitute the bulk of the costs of GPL and, therefore, if there is any slippage in that cost, we are in serious trouble,” he said. Thomas reasoned that GPL has underestimated its costs largely because it has not taken into account some of the debt and equity returns it has to meet.

In his presentation, APNU’s Carl Greenidge criticised the conceptualization of AFHP, arguing that the project was not located to be part of a future network of hydropower stations in the Potaro Basin to take advantage of the expensive transmission network. “There appears to be no plan to develop the basin and a network of hydros as part of a bigger programme for power generation to match Guyana’s needs,” he said.

Greenidge said APNU had a responsibility to ensure that capital costs were low to avoid them from trickling down to consumers in the form of higher tariffs.

While reiterating that GPL’s management was politicized and inefficient, the former Finance Minister contended that AFHP was very expensive because of the sale of the license from the Government of Guyana to Makeshwar ‘Fip’ Motilall who in turn sold it to Sithe Global. Greenidge said that in addition the 19 percent guaranteed rate of return on investment to Sithe Global, that company would receive income from a variety of sources.

Professor Thomas called on government to scrap the hydropower license and all other agreements and memoranda of understanding with Sithe Global although government has been signalling that that the deal could be salvaged. He also wants government to release all other hydropower licenses, agreements and memoranda.