The AFC Journey…A political road less travelled… a responsibility we must own

By Nigel Hughes, AFC Chairman

Guyana has long wanted to develop a hydro-power project. God has blessed us with abundant natural resources, however to date we have not been able to completely convert this gift for the mutual benefit of the nation. Since Forbes Burnham’s 1970s efforts to build the Mazaruni Hydro project, this country has flirted with self-sufficiency in energy generation, with no tangible success to date.
Our country’s development and the prosperity of our people will continue to be stifled unless we can ensure low cost energy and energy security. In this context, a properly developed hydro-power project would provide great

Nigel Hughes

momentum in both lowering energy costs and providing energy security. I contend that if we make the right decisions, we will become the number one economy in the Caribbean. One of the key and critical reasons for the difference in development between Guyana and Trinidad is the cost of energy.
In light of the foregoing, the Alliance For Change, after considerable review, has determined that its parliamentary actions in relation to the Amaila Falls Hydropower Project were consistent with its commitment to the Guyanese electricity consumers, as well as its commitments to renewable energy and to making Guyana an attractive venue for investors.
In light of what has since transpired, the Party is convinced that it acted in a patriotic, rational and responsible manner to safeguard both the people of Guyana and the project, by approving a parliamentary action to increase the debt limit. It was our considered opinion that this course of action would have given a lifeline to the project and would have paved the way for the Inter-American Development Bank (IDB) to conduct a thorough review so that we could make a decision on the viability of the project.
The IDB stated that its due diligence would be conducted on three principal areas:
1)  Whether GPL has the capacity to handle the administering and management of the large amount of electricity after Amaila is completed;
2) Whether there is economic viability of the project, that is, if Guyana’s economy can sustain it to become viable for the tariffs not to increase;
3)  The environmental feasibility.
After analyzing the outcome of the IDB’s due diligence, the AFC would then have sufficient information to determine our final position on the project.
The AFC believes that this Project was handled badly from the inception, with no formal project document being laid in the National Assembly, and no attempt made to seek early political consensus.  Further, there is no evidence of a formal and transparent tender process leading to the identification and selection of the project’s developers. The failure to share critical information on the project with the political opposition, while negotiating with the developers for the last six years calls into question the sincerity of the government’s last minute efforts to achieve support from all political parties.
The AFC is today rising in the conscience of the Guyanese people, as we say and do what is in their interest. We share and feel the people’s heartbeat for affordable renewable energy security not only from hydro-power but from a portfolio of sources including ethanol, wind and solar power, and co-generation using bagasse and wood waste.
Therefore we have every reason to support the development of hydro-power in Guyana but with the clear caveat that it must be environmentally, socially and economically feasible.  We are not going to support any project that throws good money over the waterfalls.
The AFC leadership has had serious consultations which have revealed that AFHP could satisfy the minimum requirements of the IDB’s Environmental and Social Management Report [environmental, hydrological, biotic, topographic, social management issues including the displacement and compensation of any community during and after construction.]
We believed we had enough evidence to support the Hydro Electric Power (Amendment) Bill 2013 and remain committed to our principled position. This Bill which the AFC voted in favour of guaranteed the protection of the flora and fauna surrounding any future hydropower project in Guyana.
We have come to recognize over these last two weeks that this has been misinterpreted by many to have been a vote for the Amaila Falls project itself.  Nothing could be further from the truth and one must recognize that the AFHP has never come to the parliament for debate, consideration or approval. Unfortunately given our current political landscape many have deliberately taken advantage of this misunderstanding.  This we find most regrettably.
However, this does not mean that we must surrender our concerns that the AFHP must be sound and good for Guyana. Our biggest concerns remain the key debt assumptions, the cost of finance, the lender’s fee structure and the advisory costs. We provided our word to the Government to respect the confidentiality of the details and thus professionally we cannot release those details in this presentation, but the numbers do not add up to our satisfaction.  In this regard, we have made our position clear: our full support would be reserved until the IDB completes its Economic Feasibility Technical Report (economic due diligence).
Notwithstanding this, the AFC, in recognition of the advanced stage of the project financing process, and an appreciation of what it takes to bring a project of such magnitude to this stage, took a position to approve two parliamentary measures intended to support the project.  Neither of these measures, as approved, presented any risk whatsoever to the people of Guyana.  The party wishes to make it clear that it had by no means endorsed this project in its current form.
The sad episode is now over but we must not lose the lessons of the experience.
1. Projects of national nature which involved substantial investment must include all stakeholders from its conception.
2. Every effort must be made to recruit and involve the best negotiating team to represent the country in any negotiations on the project.
3. Foreign investors in substantial projects in Guyana now require the approval of all major stakeholders.