Guyana cancels hydro power project
The Guyana governments has cancelled plans to harness hydroelectric power from the Amaila Falls, saying the project was too expensive.
Finance Minister Winston Jordan said at the current project cost of almost US$1 billion, the Guyana Power and Light Inc (GPL) would be required to make annual payments amounting to US$130 million to the operators of the hydro facility.
Those payments would add up to US$2.6 billion over the 20-year commitment period under a power purchase agreement, and does not include Guyana's contribution of at least US$160 million and the garnishing of US$65 million of foreign reserves, the finance minister told parliamentarians while presenting the country's annual budget.
"It would be delusional to suggest that GPL has the competence to handle such a financial burden. It would require not only massive tariff increases, but guarantees by taxpayers, through the Treasury, to provide transfers to meet this obligation," said Jordan on Monday.
"It also assumes that businesses would be willing to abandon their lower-cost power generation and take the chance that GPL will be able to satisfy their energy demands. Added to this, is the fact that Guyana would be left with all the contingent risks of the project," he said.
The identification of Amaila Falls as a potential site for hydro power dates back 40 years.
"We know now that, as configured currently, the cost of financing is too high, and that unless the price tag can be substantially lowered, we cannot proceed. In this opinion, we are strongly supported by the experts at the Inter-American Development Bank, who had considered the project to be too risky to attract the bank's financing," he said.
Jordan affirmed that the new Granger administration was committed to energy diversification and that over the next five years, the new government will adopt a more integrated energy programme that includes renewable and another potential hydropower project.
"We will examine all sources of energy-fossil fuels, wind, solar, bagasse and, of course, hydropower. We will commence feasibility studies for a large hydropower development in the Mazaruni region," Jordan said.
He said this would be done in collaboration with Brazil, and that independent power producers and suppliers were otherwise being encouraged to construct energy farms and sell energy to the national grid.
The budget presented by the finance minister for the 2015 totalled GUY$221 billion.
It includes salary increases for public servants, pensioners and the removal of consumption tax on some products.
The David Granger-led government took up office in May. Jordan said the fiscal package only covers the remaining months of the 2015 fiscal year.
In his budget presentation titled 'A Fresh Approach to a Good Life in a Green Economy', the finance minister reported that Guyana grew by 3.8 per cent, but below the original projection of 5.6 per cent and subsequent revised target of 4.5 per cent; and that inflation during 2014 was 1.2 per cent due to low oil prices.