STATEMENT FROM HIS EXCELLENCY DONALD RAMOTAR CONCERNING THE AMAILA FALLS PROJECT

Earlier this week, I spoke of how I was urging a national consensus in support of the Amaila Falls  Hydropower project, and of how it was time to put partisan politics aside in the interests of Guyanese  for generations to come.

Towards that end, I spoke with the Leader of the Opposition, Mr. Granger, who said that APNU would only be able to change their position on Amaila if their outstanding issues were resolved.

Mr. Granger said – privately and publicly – that APNU would be stating those issues publicly through a definitive Press Statement on Monday.

APNU have now issued their definitive statement.

APNU’s statement identifies the two main issues which are currently preventing them from supporting the Amaila Falls project:  APNU’s belief that the Amaila Falls project is likely to “condemn Guyanese to excessive  indebtedness” and  APNU’s belief that the Amaila Falls project will not “provide assurance that the final cost  of power to the consumer will be appreciably lower than the current tariff”.

I agree with APNU that these two issues are the most important ones.

They are easy to resolve.

Therefore, to help build consensus on these two outstanding points, I suggest that Mr. Granger’s team and a team from the Government meet to once and for all settle these issues, and to publicly communicate the meeting’s outcomes.

I hope that it will be possible to jointly agree that:

- on indebtedness, Guyana is incurring no debt from the Amaila Falls Hydro project. That is one of its strongest benefits for the taxpayer.

- on the consumer tariff, Amaila Falls will reduce the tariff paid by GPL for electricity by  40% for the first twelve years after operations begin, by over 70% for the eight years after  that and by over 90% for the eighty years after that.

This reduction in the GPL tariff will allow two things to happen:

* Removal of the subsidy that the taxpayer has to give GPL today (which is mainly  used to offset the cost of GPL’s electricity) – this will save over US$30 million per  year, or US$600 million over twenty years, to be invested in other areas such as  education, health and roads.

* A pass-through of the remaining savings to the consumer, which will result in a reduction of over 20% in the electricity bills of Guyanese businesses and consumers within two years of the start of Amaila’s operations – and significantly more in the years ahead as GPL’s tariff gets progressively cheaper (unlike with oil and diesel, Amaila’s electricity price decreases dramatically over time). The pass- through of GPL’s progressively cheaper tariff can lead to reductions in the consumer tariff well in excess of 50% of today’s price after twelve years.

After the meeting, if Mr. Granger and his team agree that both their stated concerns are being met,  then Guyana can put the rancour of recent weeks behind us, and forge a strong, unified, and national  consensus in favour of the Amaila Falls project.

Because there is still work to do.

IDB Due Diligence

Most importantly, once there is national consensus behind the Amaila Falls project based on the costs  and benefits already communicated publicly, then the IDB will be able to complete their due diligence  to publicly validate those costs and benefits.

The Government of Guyana invited the IDB to carry out due diligence on the Amaila Falls project some years ago, based on the reality that the IDB possesses technical capacity which is not available in Guyana. All of their work is carried out in accordance with their internationally accepted financial, social and environmental safeguards.

Currently, despite years of work, the due diligence cannot be completed because the developer (who is the one spending the vast majority of the money to do the tasks required by the IDB) cannot  proceed without national consensus in Guyana.

Yet, completion of the IDB’s due diligence – and a conclusion that the details underpinning the project are sound – would enable the Amaila Falls project to go to the IDB Board in October.

This in turn would trigger the six-week public GRIF process to release most of the remainder of the taxpayers’ equity contribution to Amaila.

Unlocking the Triple Lock

To summarise: by the end of the year we can open the triple lock that currently stands in the way of  the best chance of realising Guyana’s development potential in decades. Opening the triple lock means:

- Demonstrating national consensus that the people of Guyana want this project;

- IDB Board approval that the project is financially, socially and environmentally viable;

- GRIF Steering Committee validation that the project is in line with Guyana’s Low Carbon

Development Strategy and its provisions

These steps in turn will enable final contracts to be signed – at the price agreed for the construction of the Amaila Falls project, which expires on December 31, 2013.

Realising Guyana’s Potential

Unlocking the triple lock would mean that in 2017, Guyana can have clean, affordable, reliable energy. This can transform our economy, and bring benefits to all Guyanese. To repeat what I said on Monday, the facts are clear:

Today, GPL incurs an electricity generating cost of US$19c per kw/h. With Amaila Falls Hydro, GPL’s cost of electricity can be dramatically reduced, to:

- 11c per kw/h in the first twelve years, 40% less than today

- 5.6c per kw/h in the next eight years, 71% less than today

- 1.8 c per kw/h for the following eighty years, 91% less than today

As a result, the Amaila project can:

- Reduce electricity bills for Guyanese consumers and businesses – average tariffs for consumers will come down by at least 20% within two years of commercial operation of the hydro

- Eliminate the need for Guyanese taxpayers to subsidise GPL. In 2012, the subsidy cost taxpayers over 6 billion dollars. This will no longer be needed, and the money can be invested in other important national priorities, such as roads, schools and hospitals

- Greatly reduce Guyana’s dependence on foreign oil, and insulate the economy from the risk of rising oil prices. Unlike oil, the price of Amaila’s electricity will go down over the next twenty years.

- Reduce black-outs. To avoid outages, the plant has:   Four individual units and full redundancy in the auxiliary systems,   two transmission lines, each capable of transmitting 100% of the plant’s output

- Transform Guyana’s electricity sector from being fully oil-dependent to one built on clean, renewable energy. As the flagship of the Low Carbon Development Strategy, Amaila will enable reductions in Guyana’s greenhouse gases from electricity generation by approximately 90%

- Support business growth in the processing and manufacturing industries, and create new jobs

- Send a positive message to large global investors that Guyana is open for investment and set a new standard for the size of investment possible in Guyana

- Be constructed without any debt being incurred by the citizens of Guyana. The plant will be fully paid for by the sale of electricity – at prices far cheaper than today

- Be fully owned by the people of Guyana twenty years after operations begin

- Last for at least a hundred years – providing affordable, reliable energy for generations to come

These benefits can transform our nation, and the life opportunities of generations of our people.

History can record these weeks in August 2013 as the time when all our politicians put the interests of our nation and our people first.

I hope we will not let them down.

Office of the President, Georgetown

August 16, 2013