Amaila Falls hydro project will remove risk of price volatility – Finance Minister
The Amaila Falls Hydro power (AFHP) project is the most prominent and transformative scheme that will convert Guyana from being entirely dependent on fossil fuels to becoming dependent on renewable energy. This will in turn bring back benefits and the avoidance of a significant import bill associated with fuel for electricity generation.
Finance Minister Dr Ashni Singh, said hydro power in Guyana will see a reduction or almost elimination of the risk of exchange rate, and it will remove the risk of price volatility, particularly regarding oil. He made these statements during a segment of the five-part series being aired on the National Communications Network on the AFHP.
Minister Singh noted also that while hydro power is extremely attractive and beneficial to the people of Guyana, it has environmental advantages, being consistent with the country’s Low Carbon Development Strategy. Putting all these advantages together, he observed that it would bring reliable and affordable power, reduce the cost of electricity to every household, and to every business, and relieve the latter category of having to invest in back up power.
With respect to cheap energy becoming abundant through the AFHP, Minister Singh observed that “there can be no doubt at all that affordable, reliable energy is absolutely critical to an economy that is going to perform well and that will facilitate improvement of social and individual well being.” He recalled that energy is a critical input into every productive process and as a result, energy goes to the core of doing business in any environment. Minister Singh pointed out that the reality is that each investor in Guyana has to factor in the cost of back-up power especially in capital and operating costs, which is significant.
He expressed no doubt however, that should the need for this be removed, “domestic profitability will be increased because they don’t have that carrying cost any more…operations would become greater, they are going to set up new industries.”
Minister Singh emphasised that more affordable power would mean greater investment, job creation, increased profitability which would bring fiscal benefits, improved capacity to pay wages with more competition, “and ultimately, people’s net disposable income would be increased.”
The reality, he pointed out, is that the generating capacity of the Guyana Power and Light (GPL) Company has to be increased along with the upgrade of the distribution network. This cannot be possible without the harnessing of hydro power he stated. ‘It is time we harness that potential and realise the transformative benefits for our country,’ he stated.
“I am convinced that project deserves to be placed on its merit on the highest level of our priorities, and that is our Government’s position,” Minister Singh said.
He also pointed out that the Blackstone Company, one of the largest investment companies in the world, through its subsidiary, Sithe Global feels that the AFHP is a good project and as such it should not be dismissed.
He also noted that this AFHP is not only about cheaper power and lower bills, it also involves macroeconomic outflow. This includes the demand for foreign exchange in Guyana, taking into consideration that GPL and any self – generating business are currently vulnerable to price volatility regarding oil prices on the international market. This reality is that with the fluctuating prices, either the consumer or the generator of electricity has to pay the cost.
“Amaila Falls relieves you of the vulnerability of oil price fluctuation, and relieves you of the need to find hundreds of millions of US dollars to import fuel,” he stated.
Speaking on the environmental dimension, Minister Singh noted that with Guyana’s commitment to the LCDS, the AFHP as a single investment moves it from a country fully dependent on fossil fuels to one fully dependent on a renewable resource, water.
“This project can be seen from many perspectives and has strong justification from each perspective,” Minister Singh said.
Financial funding is already on stream for the project the Minister observed, with the Chinese, and Inter-American Development Bank committed to their investments.
Meanwhile, Prime Minister Samuel Hinds, in the first part of the series noted that the journey towards developing hydro power in Guyana dates back to the days of the Demerara Bauxite Company, the 1950s and 60s and targeting the Mazaruni River as a base. He noted that between the 1970s to 1980s a study was done regarding the locations for hydro power plants; however the expectations then were less than now both socially and environmentally.
He expressed the hope that within two years of the AFHP being completed, it would be able to handle the peak demand of power needed in Guyana.
