Construction of Amaila Falls Hydropower power project hits snag

Last Updated on Monday, 30 May 2022, 19:55 by Denis Chabrol

Six months after China Railway was identified as the preferred bidder to open negotiations for the construction of the US$700 million Amaila Falls Hydropower project, that company has told the Guyana government it could not afford a Build Own Operate Transfer (BOOT) model, Vice President Bharrat Jagdeo said Monday.

“The negotiations are very difficult and as of April 22nd, they wrote us saying that they are having a hard time doing the boot contract and they want to shift to an EPC (Engineering Procurement and Construction) plus finance; that the government finances the project and then they would be the EPC contractor,” he told a news conference.

He said talks were continuing with government’s aim to convince China Railway to stick with the BOOT option as switching to an EPC model would require the project to be retendered. “It’s a last ditch attempt to save the model,” he said.

China Railway had been evaluated by the National Procurement and Tender Administration Board (NPTAB) as the most responsive bidder with an offer to build the Amaila Falls Hydropower Project out of its own pocket, operate the facility and sell Guyana Power and Light (GPL) electricity at 7.7 US cents per kilowatt hour.

The Vice President ruled out opening negotiations with the second ranked bidder because the cost of electricity sale to GPL is pegged at 9.9 US cents per kilowatt hour and that would be uncompetitive when compared to the projected cost from the proposed natural gas-powered electricity station to be built at Wales, West Bank Demerara. During the pre-2015 period, the Amaila Falls Hydropower project  had proposed to sell the electricity to the grid at just over 10 US cents per kilowatt hour when the fossil fuel-generated electricity was at 20 US cents per kilowatt hour. But, with the gas-to-energy project expected to supply power at 6 to 7 US cents per kilowatt hour the cost can no longer be 20 US cents. “We have another source for generating power that is significantly cheaper, the cost, and so that is the key questi0n so you don’t want to lock in at say 10 cents per kilowatt hour for the next 20 years when we can get it maybe 6-7 cents per kilowatt hour maximum from the gas-to-energy project,” he said.

In light of the current status of the negotiations and the possibility of switching to an EPC model, Mr. Jagdeo conceded that the 165 megawatt Amaila Falls Hydropower station could no longer be completed by 2027. “We will definitely have to revise timelines  but tat will not affect our commitment to drop the price  by 50 percent because the commitment was on the basis of the power supplied from the gas-to-energy project so that the timeline is very strong,” he said.

Mr Jagdeo also hinted that the Amaila Falls Hydropower project might be some way off should the current talks with China Railway collapse. “We may even have to consider whether we’d have to bring in or do more from gas too in the shorter term until we get a favourable project in that regard,” he said.

The then A Partnership for National Unity+Alliance For Change (APNU+AFC) administration had scrapped the project and remained unconvinced about its prospects based on a study by the Norway firm, NORCONSULT.