Early due diligence report validated Amaila Falls as economically profitable and beneficial to Guyana
In early June, 2013 the Government consulted and shared with the joint-opposition a number of key Amaila Falls related project documents and reports. One report, entitled “Economic and Financial Evaluation Study: Guyana-Amaila Falls Project”, prepared by Mercados Energeticos Consultores and commissioned by the Government in 2009 found that the Amaila Falls project would provide an economic rate of return of 33% to Guyana, reduce GPL’s average supply costs and would bring structural benefits to GPL.
In 2009 the Government of Guyana retained Mercados Energeticos Consultores to perform an economic and financial evaluation of the Amaila Falls hydroelectric project. The study, conducted by an expert team of energy sector specialists, sought to evaluate the economic profitability of the Amaila project for GPL and ensure the supply of power would be consistent with GPL’s medium and long-term demand projections.
While the report’s conclusions date back to 2008 and 2009, the fundamentals of the economic profitability are only more pronounced today in a high-fuel cost environment. The Mercados report evaluated the Amaila project against oil prices of UDS$75 a barrel. Fuel prices today are significantly higher, translating into an average generation cost for GPL in excess of US$19 cents per kw/h. This cost is compared against Amaila Falls which would reduce the cost of generation to US$11 cents, a 40% savings over the first twelve years, and falling to US$5.6 cents in the next eight years of the concession, a 71% savings to today’s generation costs.
The report’s findings that the Amaila project would bring structural benefits to GPL, is the optimal low-cost generation solution and is economically profitable for Guyana were a key factor in assessing the merits of moving forward with the development of the Amaila transaction and are only more relevant today than ever. Despite numerous consultations with the joint-Opposition, access and availability of confidential information for many months and incontrovertible facts showing the economic benefits of the Amaila project, APNU still denied the advantages of cheaper and reliable hydropower to the people of Guyana.
About Mercados Energeticos Consultores
Mercados EnergÉticos Consultores is internationally recognized for its expertise in assisting governments in the design of policies for the energy sector, and in advising companies on how to identify the right strategies to conduct their business successfully.
Mercados EnergÉticos Consultores offers consultancy services concerning market design, regulatory solutions, and the definition and implementation of public policies for the energy sector.
The professional team in Mercados EnergÉticos Consultores has played a fundamental role in the design and implementation of reforms in the energy sector in Latin American and Caribbean countries. It has also worked in Africa, Asia, and Europe. Their recommended solutions have been successfully applied in very different social, economic and institutional conditions. Contributions, range from integral market design and legal and institutional reforms in the sector, to transition management and support in subsequent stages.(GoG)