THE Alliance For Change (AFC) has defended its decision to vote alongside the Government in approving two pieces of legislation deemed crucial to the materializing of the Amaila Falls Hydroelectric Project (AFHP).

Khemraj Ramjattan

The ruling party, the People’s Progressive Party/Civic (PPP/C) is one seat short of a Parliamentary majority, and relies on support from either of the two opposition parties for passage of its Bills.
Despite receiving support from the majority of legislators, however, the project’s lead investor, Sithe Global, has withdrawn from the deal as it had said it would only proceed with its
US$158 million stake in the project if there was political unanimity.
The main opposition party, A Partnership for National Unity (APNU), declined support for the key Amaila Bills.

During the wee hours of Thursday last, at the end of a marathon 12-hour-long debating session, the AFC voted to approve amendments to the Hydroelectric Power Bill and the Guarantee of Loans (Public Corporations and Companies) Act. These amendments were initially defeated by a July 18 vote in the legislature; and under the Standing Orders, these amendments could not have been re-tabled for the duration of the Tenth Parliament. The AFC, however, earlier voted with the Government to pass a Motion to have those amendments re-tabled.

“We did this because we felt that we had to, more or less, to give a lifeline to the Amaila project, because largely, we are supporters of hydroelectricity in Guyana,” AFC Leader Khemraj Ramjattan told a press conference Friday.

IDB
Quizzed by this newspaper on the reasons behind his Party’s change of heart, Ramjattan said: “We were always supportive of the project from the beginning, but we wanted more information.”
According to him, the AFC could not on its own have obtained most of the information pertaining to the project.
“When we met the IDB, the IDB indicated clearly to us that they are going to get all the information from the sponsors of the project…. That’s why we were piggybacking on the IDB,” he pointed out.

Ramjattan said the AFC maintains its position that it would await the outcome of the IDB’s due diligence of the Amaila project before throwing its full support behind the venture. The party still holds sway over the project, since it held out on the Government’s request to alter the public loans guarantee bill to lift the debt ceiling from its original $1 billion limit to $150 billion, even after the Government lowered its request to $130 billion. The AFC chose not to raise the debt ceiling beyond a modest $50 billion.

That amendment, Ramjattan added, was passed with an important “proviso”: that the increase in the debt ceiling be tied specifically to the Power Purchase Agreement (PPA) signed between the Amaila Falls Hydro Inc., GPL, and Sithe Global, one of the project’s lead sponsors.

“We did not want to kill it (the project) before it reaches the IDB (IDB‘s due diligence stage) by…not giving at least some guarantee to the investors,” Ramjattan elaborated.
The amendment to the Public Loans Guarantee Act is seen as crucial to locking in a guarantee sought by investors that the administration will step in should the state-owned GPL be unable to pay for the power it buys from Amaila Falls Hydro Inc. (AFHI), the special purpose vehicle (SPV) created to produce hydropower.

Ramjattan indicated that another proviso to the amendment was that the bill be returned in three months’ time, by when the IDB is expected to conduct its due diligence exercise, so that the $50 billion limit can be re-examined and possibly increased.
“If the IDB says that the green light for the project is given but there might very well be the need for the upping of the guarantee to ensure security for the project, definitely, I think, we may be in a better position to know whether we will up it further, and by how much,” he assured.

Lower Tariffs

Citing a formula used in the PPA, the AFC party leader also indicated that he believes tariffs, at least theoretically, could come down as a result of the Amaila project, since Amaila’s generation cost of between 11 and 12 US cents per kW/h stacks up favourably against the cost of electricity generated by conventional sources, such as hydrocarbons and diesel, which respectively amount to 19 and 17 US cents kW/h.

“GPL will really have to manage the thing badly to bring it up to the 29-30 cents that we now pay as residential consumers,” Ramjattan opined.
He advised that if GPL is capitalized, its board revamped, and measures put in place to boost transparency, the end cost of electricity to consumers should be lower than what obtains presently.

Ramjattan assured, however, that part of the IDB’s due diligence -- in addition to considering the economic viability and environmental feasibility of the project -- includes the capacity of GPL to manage and distribute the large amount of electricity output from Amaila.
Harking back to the de-facto timetable crafted by the party, he added: “Within that three months’ time, we feel that the IDB would have done quite a lot of technical work, especially on the competence and ability and capacity of GPL, as to whether it will run the distribution to consumers at such a rate that will not see any increase and probably see, as government has been saying, 20 to 40 percent decreases.”

Advancing the rationale that the cost of electricity generated from traditional sources is expected to rise, Ramjattan stressed that it is important that Guyana takes the Amaila deal.