Norway halts forest payments pending new Govt. decision – Norway report
June 20, 2015 | By KNews | Filed Under News, Source
On May 11, an election in Guyana ended the 23-year rule of the People’s Progressive Party/Civic (PPP/C), which had been a partner for Norway’s US$250 million forest climate deal with the South American country.
Five days before the election, Norway announced its decision to pay another US$40 million (NOK 300 million) to Guyana for avoided deforestation during 2013, bringing total Norwegian payments to US$190 million.
According to the deal with the former government, Norway rewards Guyana for keeping its rate of deforestation low. Funds are disbursed for projects listed in Guyana’s Low-Carbon Development Strategy, whose flagship is the Amaila Falls hydropower dam.
Development Today is told that the latest US$40 million is being held back, pending discussions with the new government in Georgetown. Key elements of the deal are being re-assessed.
“It is now up to the new government of Guyana whether they still want to go forward with the Low Carbon Development Strategy,” says Elisabeth Brinck Sand at the Norwegian Climate Ministry.
The status of the Amaila Falls project – which counts for almost one-third of the deal with Norway – is also unclear. At the beginning of this year, Norway disbursed US$80 million to the Inter-American Development Bank (IDB) as equity for Amaila Falls, in recognition of Guyana’s avoided deforestation during 2011 and 2012. Those funds will be held by IDB until July 2016. (See Table Below)
But the developer pulled out two years ago, and has not been replaced. Christopher Barton at IDB confirms to Development Today that Amaila Falls is not currently in the bank’s project pipeline.
Barton notes that “given the results of the recent election, we anticipate that a new government will conduct a review of all of its energy priorities and options as a part of a more comprehensive review of the IDB’s Country Strategy with Guyana.”
Norway’s decision to pay out US$40 million to Guyana so close to election time raised eyebrows. Political Advisor at the Climate Ministry Jens FrØlich Holter denied that Norway had any intention of influencing the election outome.
“The decision on the disbursement was made and was announced in accordance with normal procedures,” he told the daily Bergens Tidende.
Brinck Sand confirms that the latest US$40 million payment will not be disbursed until the new government’s position on the low-carbon strategy is known. “Until [the status of the strategy] has been discussed between our two governments, the funds for the 2013 results will not be disbursed,” Brinck Sand says.
TAKING STOCK
So far, only 16 per cent of the US$190 million in funds for Guyana – US$31 million – have actually been disbursed for projects on the ground. The rest sits in accounts in Washington – at the IDB (for Amaila Falls) and in a World Bank-managed fund known as the GRIF.
Potentially then, US$60 million remains to be disbursed from the original US$250 million. DTis told that the payment for Year 5 (2014) is likely to be announced in January 2016.
As the table shows, the disbursement schedule has been anything but smooth. After 2011, Norway failed to disburse any money for three years – 2012, 2013 and 2014 – partly because of uncertainty surrounding the Amaila Falls project. The Climate Ministry has played catch up this year, announcing three disbursements.
Norway appears to be keen to continue its climate forest cooperation with Guyana. In the English version of the Climate Ministry’s May 6, press release, it states that the governments are “discussing the possibility of a renewed partnership for the period from 2015-2020”. It remains to be seen whether the new administration in Georgetown is on board. (taken from Norwegian’s Development Today)
NORWEGIAN REDD PAYMENTS EARNED BY GUYANA 2010-2015:
* USD 30m payment in 2010 was a grant, not result-based.
