Gov’t inks $7.1B agreements with EU - for hydropower and sugar industry
Georgetown, GINA, May 25, 2012
Minister of Finance, Dr. Ashni Singh and European Union (EU) Ambassador, Robert Kopecky exchange copies of the agreements at the Finance Ministry’s boardroom, Main Street
The Government of Guyana today inked two financing agreements with the European Union (EU) valued €27.4M (approximately $7.1B) for a micro-hydropower system and accompanying measures to the sugar sector.
The total cost of the micro-hydropower system which will be established at the Chiung River, Kato, Region Eight is pegged at €2, 455, 797 or G$615M of which the EU will be contributing $460M under the 10th European Development Fund (EDF) while Government will be plugging in $154M.
The second agreement is for the Guyana Action Programme on accompanying measures on sugar, which will see the provision of €24.9M (G$6.5B) by the EU.
Speaking to media at a signing ceremony at the Finance Ministry’s boardroom, Minister of Finance, Dr. Ashni Singh said that the agreements are in two areas that are essential to the country’s national policy agenda.
He explained that the agreement for the micro-hydropower system should be viewed within the context of the national strategy as it relates to low carbon development as well as the provision of social services.
“We have said that we would like to bring electricity to every home in Guyana; we recognise that given the geography of our country it would be difficult to have a single national grid that would see the delivery of electricity to every home, as it would be sub-optimal for the national grid on the coast to extend to hinterland villages and so we have seeking solutions outside of the national grid to deliver electricity to communities that are distant from the coast,” the Finance Minister said.
Government will also be constructing a secondary school in Kato to accommodate 550 to 750 students and this complex will be powered by sufficient generating capacity to provide for electrical services. Moreover, a system to provide electricity to Paramakatoi through 16 km transmission lines also forms part of this intervention.
Minister of Finance, Dr. Ashni Singh, European Union (EU) Ambassador, Robert Kopecky and other officials from the EU and the Finance Ministry at the signing of the €27.4M agreements
The broader cheap energy programme which has been the dream and aspiration of generations of Guyanese will see the harnessing of hydropower with the materialisation of the Amaila Falls Hydro Power Project.
The project involves the construction of a hydropower plant in the area of west-central Guyana, where the Amaila and Kuribrong rivers meet. Electricity produced at the plant will be delivered to Georgetown and Linden through a high-voltage 230-KV transmission line that will be built along with electric substations in Linden and Georgetown. The 270 -km long transmission line will carry two circuits thus providing redundancy in the event of loss of one circuit.
Sugar
In terms of sugar, Government has long recognised the need for the implementation of reforms in this vital sector to make it more competitive and viable. To this end, an action plan has been developed which involves a number of elements aimed at achieving a profitable industry.
Minister Singh said that Government’s investments in this sector over the last 10 years including the $4B financial transfer in this year’s budget, amount to over US$200M.
Government has received significant support from its European partners; the Enmore Packaging Plant being the most recent manifestation of such support. The Minister said that, an investment such as this is absolutely critical in ensuring that the sugar industry is going to be profitable into the long-term.
The sugar accompanying measures programme is delivered using a budget support modality, which differs from a project support modality. This essentially means development support that is delivered is tied to the achievement of certain objectives and once delivered, it is deposited into the consolidated fund.
“So there is a set of key objectives, which are basically aimed at increased production on output and increased efficiency and competitiveness and then there are specific indicators that are identified and targets that are identified between the sugar industry, Government and the EU. Once those targets are concluded and are included in the agreement the disbursement of the grant are tied to those indicators and targets,” the Finance Minister highlighted.
In order to achieve these targets however, the industry has to make the necessary investments that are required and this is often done with Government’s support.
EU Ambassador, Robert Kopecky in his remarks said that part of this financing will go towards the noble idea of renewable energy to be able to boost further development of the economy, not only on the coast but also in places the hinterland; moreso, human development.
With regards to sugar, he recalled that given the new scheme of the world’s economy, the World Trade Organisation (WTO) pushed the EU a few years ago to review the mechanism of preferences that were applied to a number of countries including Guyana; particularly as it relates to products such as sugar.
“We were forced to move from one regime to another; but we did in a smooth way, whereby we deployed these accompanying measures, which seek to help the Governments of the countries involved to deal with the new situation of price cuts,” he explained.
