Brassington embarrassed over Amaila revelations

…was unaware of Sithe Global repayment arrangement – Chris Ram

“Perhaps Brassington could tell the public whose debt it would be, if for any reason GPL is unable to meet its monthly payments to Sithe Global.”

Financial Analyst Christopher Ram has accused Guyana’s lead negotiator on the Amaila Falls Hydro Electric Project, Winston Brassington, of being embarrassed by the revelation of the amateurism he and his team displayed in negotiations with Sithe Global. Brassington on Wednesday last sought to respond to the assertions being made by Ram, by firstly lamenting that he (Ram) circulated confidential information.

Financial Analyst Christopher Ram

Ram says he is not surprised that Brassington took almost two weeks “to make up a response.” “I recall my own discomfort for him (Brassington) that on the critical issue of repayment of Sithe’s capital, he was unaware of what Sithe had inserted in the Power Purchase Agreement (PPA) and had to be corrected by one of his advisors,” Ram asserted. This publication reported during the past week that Government had agreed to pay Sithe Global interest on money already repaid. Ram had explained that the arrangement is akin to depositing $100,000 in a bank, withdrawing $90,000, but the bank continues to pay you interest for twenty years on the initial deposit of $100,000. Cheap Shots Brassington in his response to Ram on Wednesday last, had said the Financial Analyst agreed there would be no public debt as a result of Amaila. Ram retorted that this was among the many “cheap shots thrown at me by Brassington that can be easily dispatched”. Ram denied saying that he conceded no public debt and reminded that what he did in fact say was, “by going to the National Assembly, the Government acknowledged the debt implications of the project.” The financial analyst said that “perhaps Brassington could tell the public whose debt it would be, if for any reason GPL is unable to meet its monthly obligations under the PPA which Sithe (Global) was planning to impose and which he and his advisors meekly accepted.” Brassington had also indicated that Ram accepted the government’s view that with Amaila the subsidy paid to GPL would be eliminated. Ram says that the reason for this is simple, given that under the arrangement with Sithe Global any subsidies to the power company would have served as a breach of contract. This means that the power company would have to adjust its tariffs annually in order to make its payments and meet its expenditure, without any subsidy from government. “No Guyanese, let alone Ram, could have any opinion or option on subsidies post-Amaila: Brassington’s negotiation friends at Sithe (Global) put paid to that.” Padded Costs Ram said too that Brassington, the lead negotiator for Guyana on the Amaila project, seemed entirely unaware that Sithe Global or its Special Purpose Vehicle Company was going to be reimbursed for, or credited with seemingly padded costs and fees. Ram pointed out that this information can be had in the feasibility report for the project, which was submitted in March 2010 by an Argentina-based entity and “ducked for more than three years.”

Lead negotiator on Amaila, Winston Brassington

The Financial Analyst said that during his meeting with Brassington and his team, they agreed that Sithe Global would recover substantially, which would effectively reduce its “equity” commitment of US$150M. Ram said that Sithe Global was geared to recover unlimited fees and expenses of counsel and other consultants; unlimited out-of-pocket costs including travel and fees and expenses of firms or organizations hired by the company; unlimited costs and expenses incurred for the procurement of the construction and related contracts. Ram said that the company would have also recovered all costs incurred prior to the commencement date of the project, including US$12M, to pay Makeswhar Fip Motilall, who had failed to meet even the most basic condition of the Interim Licence. WOEFULLY UNAWARE Given the revelations, Ram opines that Brassington and his team seemed woefully unaware of aspects of the Hydro-Electric Power Regulations. Ram charged that, “Brassington’s leadership of the negotiations stood out for its dangerous unfamiliarity with the law governing hydro-electric power…Worse, he agreed to a billion-dollar legal bill that appears to have served all but the interest of the Guyanese taxpayer and consumer.” Ram said too that in seeking to prove that electricity rates will decrease, through the Amaila Hydro Project, Brassington, “entertains himself in fantasies about the exchange rate, dramatic system loss reductions, the end of private generation of power, a competently managed GPL and full rates charged in Linden for power.” In his blistering response, Ram concluded that, “it is of course worth noting that Brassington has not addressed the fatal flaws of the project identified by Kaehne Consulting Ltd. of Canada or Mercados of Argentina, whose reports he misrepresents, particularly about Amaila’s hydrology and the cost to be paid by GPL for power to be purchased from Amaila.”