Govt. in talks with Amaila Falls Chinese contractor to build new DHB
Mar 13, 2022 -- Source -- Kaieteur News Online -- https://www.kaieteurnewsonline...or-to-build-new-dhb/
By Davina Bagot
Kaieteur News – The Government of Guyana is currently in talks with the company that will be constructing the Amaila Falls Hydropwer Project, China Railway First Group, to also build a new bridge over the Demerara River to link Regions Three and Four.
On Saturday, Minister within the Ministry of Public Works, Deodat Indar explained that a consortium of companies have been engaged as they were the second lowest bidder for the new Demerara Harbour Bridge (DHB).
He was keen to note that the discussions with the companies are not yet complete and that there was still a long way to go in finalising an agreement.
The companies are China Railway Construction Corporation International Limited in joint venture with China Railway Caribbean Company Limited; and China Railway Engineering Bureau Group Company Limited.
Three financial proposals were submitted by the firms for the project of US$260,852,464, US$260,852,464 and US$300,000,000.
It is understood that China Railway First Group, China Railway Construction Corporation International Limited, China Railway Caribbean Company Limited and China Railway Engineering Bureau Group Company Limited are all subsidiaries of the parent company ‘China Railway Group Limited’.
Research conducted by Kaieteur News show that the company is headquartered in Beijing, China. The firm said on its website that China Railway Group Limited “is a super-large corporate conglomerate engaged in engineering survey, design and construction, industrial equipment manufacturing, real estate development, resources and mining development, financial investment, and other fields.”
It also boasted of being one of the world’s largest construction and engineering contractors, being listed among Fortune Global 500 for 16 consecutive years.
This publication also found that the major shareholder of the company is the state-owned China Railway Engineering Corporation (CRECG).
The Chinese company said it has long enjoyed a good reputation in the global market and since the construction of the 1,861-kilometre Tanzania-Zambia Railway in the 1970s, the company has successively built a large number of “excellent projects” in countries such as Asia, Africa, Europe, South America and the Atlantic. In fact, it said it presently has representative offices and carries out projects in more than 90 countries and regions around the world.
About the new DHB
The contract for the new DHB was first awarded to another Chinese firm, China State Construction Engineering Corporation Limited to the tune of $53.7B. Vice President, Bharrat Jagdeo announced earlier in February, during an interview with a foreign media house that the contract was pulled from the firm as the cost of financing was too high.
During the interview, the Vice President said, “we have just terminated the negotiations with them (CSCEC) because the cost of financing is too high.”
The Chinese firm had secured the contract to build the new bridge under a Design-Build-Finance (DBF) model.
During the reading of the Budget 2022, however, Senior Minister with responsibility for Finance, Dr. Ashni Singh had announced that this year, some $21.1B has been allocated for the project.
The government was aiming to start construction of the new four-lane fly-over bridge by the end of 2021.
With a contract still to be signed, the proposed location for the New Demerara River Bridge will see the structure being laid between Nandy Park on the East Bank Demerara and La Grange on the western end of the Demerara River.
Amaila Falls Hydropower Project
The Amaila Falls Hydropower Project has been marred in controversy ever since its proposal more than 10 years ago. The previous administration had completely thrown out the project, as it believed the venture was not feasible.
However, the People’s Progressive Party (PPP) government is running full speed ahead with this project, to be executed by China Railway First Group.
The project is expected to cost some US$700M, but Guyanese will not be paying for the project up front. Instead, the country will be purchasing electricity from the plant at an average cost of $7.7 cents, as the project is being pursued under a Build Own Operate Transfer (BOOT) model, in which Guyana would, in 20 years’ time, take over ownership of the project.
Under this agreement, the owner—China Railway—will assume all of the debts and equity and that power will be purchased by the Guyana Power and Light Inc. (GPL).
“GPL will buy all of the power under a PPA (Power Purchase Agreement),” and the contractor will have to assume the majority of the risks in the project, Project Head, Winston Brassington said.
Even though this assurance has been given, Guyana is still burdened by six of the most dangerous risks associated with the project. For instance, the Guyana Power and Light Incorporated (GPL) in addition to agreeing to purchase all of the power to be delivered to Georgetown from the 156 megawatt (MW) Plant has also agreed to assume the hydrological risks involved in the project.
As such, it would mean that GPL would bear the incurred liability whenever the Amaila Falls runs dry or if the 23 square kilometres reservoir is unable to feed the hydro plant. Secondly, Guyana will be responsible for political force majeure, that is, if the government changes its mind about the project, it would still have to pay the Chinese contractor for its investment.
The third risk Guyana will stand, along with China Railway, is ‘other force majeure’. This relates to damage to the plant, by unforeseen circumstances.
Two other risks will be borne by GPL if the Amaila Falls project fails to meet the electricity demand.
