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-Govt. guaranteeing 82% of monies for 40% stakes“…no self-respecting executive would take a deal structured similar to the hydro to its Board of Directors for approval”- Gaskin, RamFinancial analysts Christopher Ram and Ramon Gaskin believe that in its current format,Cheap Jerseys China, the proposed Amaila Falls Hydroelectric Project (AFHEP) should immediately be retendered internationally, or scrapped in its entirety.The two yesterday met with several stakeholders, inclusive of representatives of the diplomatic corps, private sector and politicians among others, including the media and said, not only will the project in its current configuration saddle the nation with a huge debt, but there is no guarantee that the cost of electricity will be reduced.Financial analysts, Ramon Gaskin, and Christopher RamIn fact it is believed that the cost of electricity could very well increase, given the high levels of risk and uncertainty associated with the project.“We do not reject hydro as a proposition,” cautioned Gaskin “but this Amaila deal, we have to reject it.”He said that the project will not cost the US$840M being touted by Government, but accumulatively, will run well over US$2.2B over the initial 20 years.Both Ram and Gaskin during the engagement held at the Georgetown Club, questioned the ownership ratio of the project.It was explained that while Sithe Global will only be investing US$150M in the project, it will own 60 per cent and further receive a whopping 19 per cent interest.According to the structure of the project, Guyana will be guaranteeing 82 per cent of the US$840M required for the project and will only have a 40 per cent stake in ownership.CONFOUNDED LIEGaskin also denounced as a ‘confounded lie’ the notion that the project is still a Build Own Operate and Transfer (BOOT) Project.He said that the project has since been transformed into a Joint Venture, and according to Ram, what is worse, is that there is no shareholder agreement in place.“This thing is not no BOOT, this is a joint venture where the people of this country are putting in 82 and getting 40 and they (Sithe Global) are putting in 18 and getting 60,” Gaskin asserted.The Inter-American Development Bank has been propositioned to inject the remaining US$175M with a return on its investment at one per cent.Gaskin said that from all estimations,NFL Jerseys China, the project can be built and owned 100 per cent by Government for between US$350 and US$400M,NFL Jerseys Cheap Authentic, far below the tag price of US$840M.This fact, he said, has even been acknowledged by the developers, as he cited as an example, the Bujagali Plant built in Uganda.He said that plant was built at a cost of US$900M and delivers 250MW while Guyana’s project is pegged at US$840M to deliver only 165MW.The cost of Bujagali, he explained, is a whopping 40 per cent cheaper than that of Amaila Falls.Gaskin, himself a former Chairman of the Guyana Power and Light (GPL), said that government has continuously been lauding the amount of money to be saved with the Amaila project in place, but completely ignores the billions required to be repaid in the 20-year period.GPL ADJUSTS TARIFFSIt was emphasized that in order to make its payments,Wholesale Jerseys, GPL will set its own tariffs, and also, will review this on an annual basis to “accommodate the costs.”According to the financial analyst US$2.4B will have to be repaid and this projection does not even include that which will have to be paid back to the IDB or for Guyana’s US$100M equity.It was also noted that another worrying factor that could eventually increase the repayments exponentially, is that the repayments have to be made in US dollars while the electricity will be sold in Guyana dollars.He said that given the high level of risk involved with the exchange rate of the Guyana Dollar against the US dollar “uncertainty is present.”Gaskin said that if this is a worrying factor now, who can predict what the exchange rate will be in 20 years, for which Guyana will still be repaying in US dollars.According to the Amaila Falls document, the payments to Sithe Global will be US$110M in the first year and will rise incrementally every successive year by 1.5 per cent for the first 12 years.An artist impression of the US$840M Amaila Falls hydro dam project as released by Government.From year 13, the cost will be reduced to US$71M.GPL will be allowed to revise its tariffs, independent of the Public Utilities Commission, to meet the payments.GPL itself also poses additional risks in the project, as it was explained that the only guarantee the developers wanted was the metering of the current it sells at the point it is introduced to the grid.“The contract requires GPL to fix the system, at the point where you take the power, you got to get that right, what you do with that afterwards is your business.”This, he said, poses a problem, because while GPL will be obligated to pay for all the power it receives, it cannot sell all.He said that this is as a result of the significant level of technical and commercial losses experienced by the entity.CONTRACTUAL BLACKOUTSIt is said that with the coming on stream of the Amaila Falls Hydro there is not going to a halt to blackouts, but rather “they can now give you blackout legally,Cheap Jerseys Authentic, contractually.”The contract allows for at least six types of outages — no water, an act of God, forced blackout,Jerseys From China, and in cases of emergencies. This will entail GPL maintaining its engines, at another cost.It was highlighted that the entire proposition on the selling of the power to be produced from the Hydro facility is also based on the assumption that several large self-generators of electricity will come on board.According to Gaskin, there are no indications that companies like Banks DIH and Demerara Distillers Limited will abandon their current systems of self-generation for the hydro power.He said that the companies would not want to move away from their continuous self-generation to an uncertain grid that can give blackouts legally and contractually.Another bone of contention was the fact that documentation that should accompany the project documents are non-existent, as is the case with the shareholder agreement, which according to Ram, would mean there is little clarity.“These documents recognize the existence of a shareholder agreement, but there is no shareholder agreement. We don’t know to what extent this government has sold out. We don’t have the project description. We don’t have the EPA. We don’t have operation and maintenance terms…None of these things is there.”STAY 42 MILES AWAYIt was also lamented that one unconstitutional aspect of the contract is the fact that no Guyanese can get “within 42 miles of the plant.”The project document, according to Ram, is unclear as to whether this relates to just along the access road or a 42-mile radius around the project site.Ram also pointed to the fact that they are unclear as to why the Government was pushing to raise the debt ceiling to be guaranteed.He said that the debt ceiling that the government is looking to increase deals with public corporations, but GPL isn’t borrowing any money for the project, hence there is no need for a guarantee.
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