Govt. to guarantee GPL payments for Amaila Falls electricity … shares confidential Power Purchase Agreement with APNU
June 16, 2013, By KNews, Filed Under News, Source
The Guyana Government is looking to increase the limit on total guarantees that can be issued under the Guarantee of Loans (Public Corporations and Companies) Act.
The new proposed limit is $150B (US$750M) and according to the Ministry of Finance, the proposed increase in the guarantee limit, follows on the commitment to the Amaila Falls Hydroelectric Project.
The increase seeks to guarantee that the Guyana Power and Light (GPL) honours its financial commitments under the Power Purchase Agreement (PPA) to be entered into between the power company and Amaila Falls Hydro Inc (AFHI).
Under the PPA, GPL commits to purchase the power from Amaila for an average annual capacity payment.
Government’s obligation is in the form of a Performance Guarantee.
The Ministry of Finance says that “the Performance Guarantee is not a guarantee of debt but rather a guarantee of GPL’s obligations under its Power Purchase Agreement (PPA) to pay for power delivered from the hydro facility.”
GPL expects when the Amaila Falls project comes online in 2017, to receive over 1,000 gigawatt hours (GWH) of power.
This according to the Finance Ministry, which says that the project will save approximately US$200M annually in avoided fuel cost in exchange for paying on average, an estimated amount of US$100M to $110M per annum over concession period of 20 years.
The Amaila Falls Hydro Electric project is a proposed Build Own Operate and Transfer (BOOT) project and will revert to GPL/Government at the end of the concession period at no cost.
The Amaila Falls hydro project is expected to have a life of approximately 75 years.
The Government has shared the commercial agreement governing the transaction on a ‘confidential basis’ with the A Partnership for National Unity (APNU), including the PPA, which details GPL’s obligations.
The government says that it is looking forward to continuing discussions with the Opposition on the details surrounding the transaction and expects to have further meetings with the Opposition prior to bringing the proposed motion to increase the guarantee limit for a vote in the National Assembly.
The motion is expected to be debated shortly in the National Assembly.
The guarantee limit was last raised in 1980 from $500M to $1B.
Based on the US Dollar exchange rate in 1980, the guarantee at that time was equivalent to US$400M.
Adjusted for US inflation from 1980 to 2013, the equivalent figure in US dollar terms, today, would be US$1.1B.
Meanwhile, Prime Minister Samuel Hinds on Thursday last tabled an amendment to the Hydro-Electric Power Act, in the National Assembly.
The Bill confers on the President, the power to create hydro-electric offset reserve areas and rules for the establishment of the said areas, and for the conservation and preservation of the environment and ecosystem surrounding the hydroelectric resources in Guyana.