US$840M Amaila Falls Project … Brassington, IDB, Sithe Global meet in China to address financiers concern

June 20, 2013, By KNews, Filed Under News, Source

A Guyana delegation that includes Executive Secretary of the National Industrial and Commercial Investment Limited (NICIL), Winston Brassington, has travelled to Asia where it will be engaged in updating the China Development Bank (CDB) on the status of the US$840M Amaila Falls Hydro

Electric Project.

Head of the Presidential Secretariat, Dr. Roger Luncheon, yesterday confirmed the visit but called the mission routine.

The China Development Bank has committed some US$413.2M and Dr. Luncheon reminds “of the considerable role played by the Chinese Government, specifically the Chinese Development Bank in financing the Amaila project.”

Dr Luncheon says that it is as a result of the significant input by CDB, “that one can appreciate the latest of the visits to China by Government delegations.”

He said, also, that the delegation is accompanied by others specifically from the Inter-American Development Bank (IDB) and Sithe Global, “to engage in an updating of the status of the project.”

The Amaila Falls is proposed to be built using financing to be sourced from China, Sithe Global, which has been granted the contract to build the project, the IDB, and equity from Guyana using funds earned under the Norway Agreement.

Sithe Global’s Chief Executive Officer (CEO) Bruce Wrobel, had explained the financing of the project.

The official during a visit to Guyana had indicated that funding for the project comes from a variety of sources including US$100M in equity from the Guyana Government.

Wrobel explained that some 70 per cent of the total funding will be coming from the China Development Bank and the IDB.

The IDB is being sought after for US$175M. Sithe Global will be providing US$152.1M bringing the total project cost to US$840.3M.

Asked about specific concerns raised by the Chinese necessitating the current envoy’s presence in China, Dr Luncheon said, “I don’t believe that it is in the context of concerns raised by the Chinese; it is an obligation.”

He said that whether formal or not, it is imperative for the contracting parties to meet, to update themselves as to the status of the project. “This is another episode in that ongoing engagement of keeping each other informed.”

Dr. Luncheon sought to remind that the Amaila Falls Hydro Electric Project is the largest and most complex ever to be undertaken by the nation. “Financiers and others would be keenly aware of developments… Built into project implementation as we approach financial closure, is the resort to have all parties at a level playing field, aware of developments and proceedings.”

In terms of how the US$840M for the project is intended to be use, this publication has been told that the Engineering Procurement and Construction (EPC) cost of the actual project will amount to some US$519.6M.

The total capital cost for the project is pegged at US$652.5M, taking into consideration additional construction, development, start-up, as well as a contingency.

The remaining US$187.8M will go towards financing costs which include Interest during Construction (US$97.1M), Lenders Fee and Advisory Cost (US$34.9M), and Debt Political Risk Insurance (US$55.7M).

Speaking to the actual construction of the hydroelectric plant, Sithe Global officials had explained that of the US$519.6M in total Capital Expenditure, the plant is expected to cost US$314M, with the Transmission Line demanding some US$126M.

The additional US$79M is for currency adjustments. Interest during the construction will amount to US$97.1M

At a projected average tariff of US$101M, the plant is expected to rake in more than US$2B over the 20-year period on the Build Own Operate and Transfer (BOOT) life of the project.