The Ministry of Finance announced last night that Cabinet has granted it’s ‘no objection’ for the China Railway Group Limited to be engaged in the construction of Guyana’s Amaila Falls Hydropower Project.
According to the Finance Ministry, four companies submitted proposals to construct and execute the project but China Railway’s ‘Build-Own-Operate Transfer Model,’ where the company will supply electricity to the Guyana Power and Light Inc. at a cost not exceeding US$0.07737 per KWH and where the company will provide the entire equity required by the project and undertake all the risks associated with the project gave that company the advantage of the others.
In its current formulation, it is expected that the project will require no equity contribution from Government, in comparison with the previous project structure which was based on a government contribution of US$100 million.
Additionally, the current structure anticipates a cost of power that will be lower than the initial cost of 11 cents per KWH contemplated by the previous project structure.
Yesterday during a press conference Vice President Bharrat Jagdeo made it clear that the government will not be borrowing money to finance the project, but the initiative will be undertaken by the Guyana government.
As a result, he said, that every risk which is involved would be would the investors and not the Government.
The Hydropower project has been a flagship project of a previous PPP government, but it never got off the ground.
The party had even advanced preparation of the project by conducting technical and financial studies of the project including an environmental and social impact assessment, but the project was shot down by the then APNU+AFC Opposition which at the time believed that the project was not feasible and was too expensive.
When the coalition took office in 2015, the project was scrapped, but it made its way back on the agenda last year with the return of the PPP to the government.
The Government is adamant that apart from cheap and reliable energy, the project will also support initiatives such as the electrification of transport and e-mobility and boost the ICT and manufacturing sectors.