Tag: Amaila Falls

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A potpourri of NICIL, the Berbice Bridge and the TUF (with some computers added)

Introduction
It has been all quiet and stable on the business scene this past week, or at least what could make news. The column will resort to a number of issues which could not individually justify a column but together represent matters of some concern. One rather publicised issue was the appearance of the Minister of Finance Dr Ashni Singh with the Minister of Education Mr Shaik Baksh at a press conference to defend questionable contracts valued at approximately $300 million for the procurement of computers for schools.

The result was hardly what they would have intended. It was defending the indefensible. But please remember that this most recent contract is separate from the $5.4 billion for the laptop computers that have also generated concerns from beginning to end. One wonders whether this is why the PPP/C has made a joke of the constitutional requirement of a National Procurement Commission. If such a commission is established, the cabinet would have no role in the award of contracts and the country would be spared the extravagance and corruption we witness with each disclosed contract.

NICIL
Readers will recall that the Minister of Finance last year stoutly defended the award of the Amaila Falls Road Contract to Mr Fip Motilall – that time not for $300 million but $3 billion – ten times more than the school computers’ contract. The joke about road contracts is the building of a road to nowhere. In this case it is no road to anywhere, as far as Mr Motilall is concerned. Prominent in the award of Motilall’s contract was the Privatisation Unit headed by the ubiquitous Mr Winston Brassington, the Chief Executive Officer of National Industrial and Commercial Invest-ments Limited (NICIL), a company that enjoys corporate infamy even by Guyana standards for its failure to have audits and to file statutorily required Annual Returns for decades.

Despite this failure being raised on numerous occasions NICIL, whose directors are mainly ministers of the government, continue to receive public monies and to spend it however it pleases. It infamously played the role of handmaiden to President Jagdeo and his cabinet in the unlawful tax concessions to Queen’s Atlantic Investment Inc and has failed to provide properly audited financial statements for its expenditure of hundreds of millions of dollars of GGMC funds to build hinterland roads. It is at the heart of the proposed Marriot Hotel deal and indeed has been busy shopping around for any partner which would give the project legitimacy. No one knows where the funds will come from.

What is clear is that NICIL continues to receive public funds and late last month the Official Gazette (Legal Supplement) of June 25, 2011 carried fourteen Orders under which public lands were disposed of to individuals mainly in Linden, under agreements of purchase and sale in which NICIL was named as the seller.

One wonders whether the nest egg being built up by NICIL is for the Kingston Marriot which President Jagdeo wants to see before the elections – whatever the financial and other implications.

The Berbice Bridge Company
Some weeks ago, a group of courageous Berbicians joined in a protest at the high cost of traversing the Berbice River Bridge, demanding that it was time that something was done about it and calling on the Transport & Harbours Department (T&HD) to reintroduce the services of the pontoon MV Sandaka on a regular basis. The government has been less than responsive. To make the bridge feasible for the investors – many of them friends of the government – persons seeking to cross the river have little option but the bridge.

At the protest, persons complained that only the rich people could enjoy the bridge, describing it as “terrible” since the bridge was one of those elections promises to Berbicians. According to reports, individuals have to pay $100 to go to the Rosignol Stelling and wait a long time until the bus is full and pay $300 to cross. In all they pay $800 return and lamented that some persons who work in NA earn just $1,200 per day and are barely left with a little money. Security guards receive less.

One of the big defenders of the high fares is President Jagdeo who had told Stabroek News that especially for private cars and minibus operators crossing the river using the bridge, the one-time toll of $2,200 toll was cheap. Mr Jagdeo and his entourage never have to pay a cent so he would not know what is cheap or expensive. Unlike the Demerara Harbour Bridge, pedestrians and cyclists are not allowed to use the bridge. This would surely be what a low carbon economy would require.

With the range of concessions under the Berbice River Bridge Act surpassing those given to the Ramroops, one would have expected that these would have been seen as subsidies to be used to make the tolls affordable. Compare the toll between the two bridges: Cars – Demerara Harbour Bridge $100 while for Berbice it is $2,200.

Here is a summary of the concessions that the company and its shareholders whose names seem to be a state secret receive: Exemption from all the duties and taxes under the Tax Act; all imports of goods, equipment and services on design, construction, expansion, rehabilitation, repairs are exempt from taxes, import duties, purchase tax, consumption tax, motor vehicle taxes and all other taxes; and licence fees and other similar fees or charges. This applies to the concessionaire, contractor and subcontractor.

Other concessions are: Complete exemption for the concessionaire from corporation tax, income tax and withholding tax for the entire concession period; exemption from corporation tax, income tax and withholding tax of all dividends and interest paid. Additionally, all income earned by a contractor or sub-contractor pursuant to the Concession Agreement is exempted from income tax.

Like NICIL, the Berbice Bridge Company Inc, whose chairperson is Ms Geeta Singh-Knight of Clico fame, has not filed annual returns and financial statements since its incorporation, so we cannot tell whether the company is making money or not and if so how much. So much for the rule of law, transparency and good governance.

The PPP/C’s embrace of free enterprise
In a letter to the press earlier this week Mr Dennis Lee, an executive member of the TUF, claimed a pivotal role for his party’s leader Mr Manzoor Nadir in the PPP/C government’s adoption of the free enterprise system. That the statement has not been challenged by the ideological wing of the PPP is probably more surprising than the accuracy of the actual claim.

It is true that the government has practised a crude form of the free enterprise system in which major segments of the economy are at best poorly regulated and at worst allowed to run literally on illegal oil. Many of the nouveau riche actually started and or sustain their empire with illegal fuel, narcotics and customs evasion.

That key pieces of legislation including the Prevention of Money Laundering Act are poorly administered with none of the requisite resources to make them work is not free enterprise but abject lawlessness and deception. Indeed the TUF leader can take credit for his role in weakening the trade unions and in keeping the minimum wage of $800 per day for security workers.

But it is also true that despite his decades of railing against the IMF, Dr Jagan came to power in 1992 after he had given commitments to run with the Hoyte-inspired IMF- directed Economic Recovery Programme. The PPP/C under four successive Presidents including Mr Jagdeo who was Finance Minister to three of them comfortably ran with the free enterprise system so warmly embraced by Mr Lee.

It would be interesting to learn whether the new TUF leader Ms Valerie Garrido-Lowe shares Mr Lee’s exuberance over the free enterprise system. What she did tell me on Plain talk was that she would like to see a more compassionate system to take account of our present situation where the free enterprise system has widened unbridgeably the gap between the rich and the poor.

One might also question Mr Lee’s praise of Mr Nadir as the TUF’s investment in Guyana’s future and whether in fact the TUF was Mr Nadir’s investment in his personal future.

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Amaila Falls: Deals within a deal

Correction and apology
In an earlier piece, relying on section 25 of the Hydro Electricity Act Cap 56:03 which provided that the assignment or transfer of a licence without the consent of the President, I had questioned the authority of the Prime Minister Mr Samuel Hinds to transfer the Interim Licence from Synergy to Amaila Falls Hydro Inc (AFHEP). While that section was not explicitly amended, there were two later Acts – The Guyana Energy Authority Act and the Energy Sector (Harmonisation of Laws) Act 2002 – that transferred the functions from the President to the Minister who in this case would be the Prime Minister. I extend apologies to the Prime Minister and to readers for this. Without offering any qualification to this apology, I can state that the Prime Minister has failed to exercise his duties and responsibilities under the Act in relation to Mr Fip Motilall and his company Synergy Holdings Inc.

Introduction
Last week’s column concluded with a restatement of the obligations of a licensee under the Hydro Electricity Act. The tenth supplementary AFHEP licence is scheduled to expire this year and that means that the current licensee Sithe Global has about seven months to complete the development works set out in the Licence, a pre-condition for the application for a final licence. Sithe has a lot of work to do and from their own public utterances it seems that they are far from prepared for any serious and public criticism of their plans, clearly more comfortable with dealing with our Prime Minister. That is understandable after having been stung and embarrassed by their performance on what has been a near disastrous Bujagali Hydro Electric Plant in Uganda.

From all appearances and from the Prime Minister’s utterances, Sithe was chosen not by the government but by Mr Motilall whose competence, judgment, marketing skills and political connections have been on public display with regard to the Amaila Falls Road Project awarded to his company by the government against all informed advice. Incidentally my information is that work on the road project has been practically halted and that Mr Motilall is out of the country. There must now be doubts whether Mr Motilall will be in a position to complete the road, a fear that was expressed in a court challenge to the award of the contract to Motilall and by everyone else except the government. Already parallels are being drawn between Burnham and Jagdeo’s adventures with hydro.

‘Bigging up’
But back to Sithe which is expected to be around for some time, although for how long is another matter. Readers will recall that Business Page of May 29 sought to deal with issues raised by Mr Rafael Herz who has been identified as the Project Manager of the Amaila Falls Hydro project. Naturally he and the company want to ‘big up’ themselves but sometimes the results are not what they intend. Here are some claims made by Sithe Global on its website:

1. That it strives to be “among the best in the world at implementing large scale, socially responsible power generation projects, often in places where success has proven challenging.” If that is indeed the case then Guyana should consider whether Sithe is the most appropriate fit for us with our small-scale Amaila and whether the project’s price tag means that Guyanese have to pay Sithe for its name and reputation.

2. Its award of the 2007 EuroMoney Africa Power Deal of the Year for the Bujagali Project. Its website does not state that in 2009 the World Bank recommended a 5 per cent increase in tariffs that year and a similar percentage increase in 2010 in order to avoid “shocking” Ugandans with the inevitable price increase that was expected once the Bujagali dam was completed, despite earlier claims that power tariffs would decrease once the project became operational.

3. That its projects currently total nearly 7000 megawatts with a total capital investment potential of $15 billion. That works out at US$2.142 million per mega watt, or half the cost of Amaila.

Bujagali
On the Bujagali project, Sithe “partnered” with a division of the Aga Khan Fund for Economic Development and formed a company called Bujagali Energy Company Limited to develop the project of which the lead contractor was Salini, an Italian construction company. With Sithe’s most recent experience bordering on a disaster, it would be the most compelling thing in the world for any serious government to do serious due diligence of the Bujagali experience and Sithe’s role in it. They would want to know why the key players in the project including Sithe could have got a major element in the project so wrong; whether the problem was with the contractor or Sithe; whether there was adequate and appropriate consultations; the role and responsibility of the government; the supervision by the regulator, if any, and the scale of the project cost overrun and whose judgment and estimates were at fault.

For Sithe to simply change contractors for the Amaila project is not enough. It must be challenged and must show that it was not culpable in the debacle of Bujagali. Civil society and the press must get answers before the Amaila project gets the green light. Glib talking and throwing around numbers and self-praise are not acceptable. We are suffering from that type of behaviour in connection with the road project in which one name is common.

China Railways
Now that Business Page has revealed that China Railways’ own website shows no expertise in hydro projects, we are told that real expertise resides in China Railway’s partner, Northwest Hydro Consulting Engineers (NWH), described by Mr Herz as “one of the pre-eminent hydro firms in China.” Interestingly Mr Motilall had once described Synergy in similar terms and my research indicates that Northwest is a hydropower consulting company which carries out various levels of engineering studies of hydropower schemes and helps carry out techno-financial analyses of medium and large hydropower projects.

Mr Herz rejected a suggestion in these columns that the debt interest rate could be as high as 30% and volunteered that “in addition to the several million dollars in cash which Sithe Global has already contributed to developing this project, the company expected to invest approximately $200 million of equity towards the total project cost.” Such generalizations are not a substitute for solid information. At December 31, 2009 Sithe had advanced to AFHEP about US$800,000 which was spent on the project development expenses (US$325,000) and general and administrative expenses (US$480,000). What Mr Herz needs to do is not tell us what is not so, he should tell us the facts.

To be fair to Mr Herz he did not say that Sithe’s equity is in the form of cash and it now seems that the project is already being charged for Sithe’s time and expenses on Amaila. Does this include any payment to Mr Motilall who for several years breached practically every condition of the interim licence he was carrying around in his briefcase looking for a buyer?

Investment
Guyanese have a right to know how much cash Sithe will be investing in the project and Mr Herz might care to tell us why the company which will carry out and own the project has been capitalised with a mere US$2,500! We expect too to know the nature of the expenditure of “several million dollars in cash” spent by Sithe in developing the project and whether and how much was paid to Mr Motilall. Mr Hinds and the PUC would be discharging their duty to consumers and taxpayers by letting them in on all the costs they will eventually have to bear in electricity rates.

On the question of the cost of the AFHEP, Mr Herz had stated its “the cost per kilowatt for the construction of the hydro facility will be comparable to the cost of other hydro facilities of similar scope.” I have done a survey of the cost of projects and have come up with the information set out below, with the caveat that some of the costs are budgeted rather than actual. There are savings in terms of capacity but the relationship is not as direct or linear as might seem logical. Every project is different and where there is a displacement of persons that can be a major cost. For Amaila, population displacement is not likely to be significant.

What makes the Jirau and San Antonio plants so much more expensive than the proposed Belo Monte Dam is substantial expenditure on technically complex and expensive ship locks, as well as environmental remediation. If we exclude those expenditures the remaining cost of construction and transmission falls more within the range of the Belo Monte Dam. Sithe’s most recent Bujagali project has been described as one of the most expensive hydro electricity projects in the world. Amaila will now surpass that.

Back next week with a discussion of the request by the Minister of Finance for more money.

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Amaila Hydro: Deals within a deal

Introduction
Mr Rafael Herz, Project Manager of the Amaila Falls Hydropower Inc, in a letter in the Stabroek News of May 24 captioned ‘Inaccurate information being published on Sithe Global,’ seems to have intended a response to Business Page of May 22 ‘Deals within a deal.’ With the government’s cynical and obstinate refusal to pass freedom of information legislation, it is only through enterprising persistence and the self-serving material offered by PR conscious investors, including Fip Motilall and Sithe, that even limited information comes out in the open. Indeed had it not been for questions posed to Sithe’s representatives at their road show at the Tower Hotel, Prime Minister Sam Hinds would have been silent on what he did and did not sign and Sithe would have been able to avoid the kind of direct questions which its representatives now have to contend with but which seem to make them increasingly nervous.

Mr Herz states that the interim licence previously granted to Synergy Holdings was transferred to Sithe Global from Synergy and subsequently renewed. He then volunteered “that both actions were in accordance with Guyanese law.” It would be helpful if Mr Herz could, within Sithe’s commitment to transparency, tell us the amount of the bond posted as security for performance and whether each of the series of interim licences included “a statement whether the requirements thereof and of the Regulations [published under the Act] have been fully complied with by such interim licensee.”

And it is for Mr Hinds to tell us why with the serial failures of Mr Motilall, and after ten supplementaries to the 2002 licence, the government did not think it fit and necessary to impose any rent or royalty provided for under the Hydro Electricity Act Cap 56:03. In 2008 alone, Mr Motilall was granted three such supplementaries – on April 9, September 3 and December 16! It is a case of whom the politicians bless, let no one touch.

Cost and capacity
Mr Herz’s letter under reference does not state the cost of the project – which his colleagues had told reporters at the Tower event would be around US$667 million – nor did he state the size of the plant on completion, two absolutely necessary pieces of information to test Mr Herz’s assertion that “the cost per kilowatt for the construction of the hydro facility will be comparable to the cost of other hydro facilities of similar scope.” Mr Herz probably assumed that such information was already in the public domain and needed no repeating, but what may need repeating to him is Clause 2 of the Tenth Supplementary Interim Licence issued on January 10, 2011 which states in Clause 2 that the Memorandum of Under-standing (MOU) signed by the Government of Guyana, Guyana Power and Light Inc and Synergy is for the construction of a 100 MW hydro electric plant at Amaila.

It is true that other documents including the ESIA and Sithe’s website refer to a 165 MW capacity plant but surely the MOU which states categorically and unambiguously that that MOU remains in full force and effect (emphasis mine) must be of principal legal significance.

The January 10 2011 licence is described on the electricity.gov.gy website as the latest interim licence and expires at one minute to midnight on December 31 of this year. It seems reasonable enough therefore that it can be relied upon as authoritative in the matter, since if there were any doubts or amendments, such modifications would be written into the binding agreements. Indeed, a responsible government would want to ensure that there is no uncertainty about the details of the country’s largest investment ever, and avoid the possibility of the project sponsor Sithe delivering a plant of 100 MW and claim compliance with its obligations. Maybe it is only after completing its work under the interim licence, that Sithe will be better able to determine the precise details of the plant capacity.

Re-thinking Amaila and Sithe
What was not fair however was for him to expect that the Guyanese public would be gullible enough to accept his generalizations about “facilities of similar scope.” Could Mr Herz not name one or two, or was he afraid and embarrassed to name the Bujagali hydro project in Uganda for which Sithe has earned a rather dubious reputation as project sponsors?

I have done an internet search of projects and by any measure Amaila is coming in at a prohibitively high cost and needs to be rethought. Whether Guyana can now back away from Sithe depends on an interpretation of the interim licence, the wording of which suggests that once the interim licencees have completed the initial development and otherwise fulfilled the terms of the licence and file a notice of such completion and fulfilment together with proof of such completion and fulfilment, the Minister’s options are limited. He may conduct a survey of the works constructed or used and of the lands and waters used and occupied in connection with the project, and provided all the works have been completed, the licence makes it obligatory on him to issue a final licence to which other terms may be added.

Obligations
Next week’s column will examine some hydro electricity projects around the world and their cost, but for now it might be useful for readers to understand what Sithe as the successor licensee must do under the current interim licence in order to qualify for a final licence:

(a) Form and register a Guyana based Special Purpose Company with the “no objection” of the responsible Minister of the equity partners and shareholders to undertake the development of the project. The company which was formed has an authorised share capital of US$500 and at the end of the year of the transfer of the licence from Synergy to Sithe not a single share was issued.

(b) Obtain an environmental permit from the Environmental Protection Agency and all relevant statutory permits required for activities related to the development of AFHEP.

(c) Conclude all arrangements for the sale of hydro-electric energy with proposed consumers specified in paragraph 7 hereto (GPL, Linden/McKenzie area, Omai Gold Mines Limited and other consumers approved by the Minister) and where such hydroelectric energy is to be sold to public suppliers, the related Power Purchase Agreement (PPA) must be approved by the Public Utilities Commission (PUC). My information is that this has still not reached the PUC which in any case ought to have a public hearing before giving its approval.

(d) Complete all technical evaluation with consumers and in particular with the Guyana Power & Light Inc (GPL) including load flow evaluations, to ensure that the project can be implemented without any adverse effect on the quality and reliability of the electricity distributed by public suppliers to the public.

(e) Finalise and survey all lands to be occupied for construction, maintenance and operation of AFHEP, including the access road and transmission line routes.

(f) Prepare and negotiate EPC (engineering, procurement and construction) contracts and incorporate the final prices in the interim licensees’ financial model.

(g) Conclude all financing and pre-closing activities for the development of the AFHEP.

(h) Complete initial developmental works related to the construction of the proposed forty (40) kilometres access road from Pamela Landing to the project site and the airstrip at the project site.

(i) Collect additional hydrological data on an ongoing basis to verify the levels of firm power during dry seasons.

(j) Prepare and submit to the Minister responsible for energy a business plan and a framework for an operating and maintenance plan describing the intended approach to operation and maintenance, the proposed operating standards and likely costs.

(k) Previously applicable to Synergy and Harza.

Guyanese need to make sure that the Prime Minister and the government do not allow shortcuts which are in breach of these obligations.

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Amaila: ‘Deals within a deal’

Introduction
Mr Hinds’s intervention on the Amaila issue came one day after the press carried a report that hydro-electric “pioneer” Mr Fip Motilall had received approval for the transfer of a licence to Sithe Global, which some time in 2002 he had been awarded under the Hydro-Electricity Act Cap 56:03 to develop a hydroelectric plant at Amaila Falls.

Letting the cat out of the bag
It is important to nail the myth that Mr Motilall pioneered the Amaila Falls project. The studies on that Falls’ potential were done in the 1970s, and Mr Motilall was given access to them by this administration. If the Prime Minister would care to read from his own website, he would notice that the feasibility study done by Kaehne Consulting Ltd for the government in 2002 described Synergy/Harza as “developers.”

It was the senior Vice-President of Sithe, Mr Jim McGowan who on Thursday last at the Hotel Tower, let the cat out of the bag when, in answer to a question from the press at what was supposed to be a road show, said that his company had “acquired Synergy’s interest in the licence.” Neither he nor Mr Philip Mooney, the consultant to the project appeared to know that the law provides first for an interim licence and then a final licence, or the difference between the two. Indeed, Sithe is acting as if it has a final licence and one wonders whether the pattern of non-compliance with the law will continue despite the increasing scrutiny.

In a series of five columns I did in May-June 2010 I pointed out the amazing level of unfamiliarity with key provisions of the Hydro-Electricity Act demonstrated by no lesser persons than President Jagdeo and the Head of the Presidential Secretariat Dr Roger Luncheon, and the confusion they have sown with throwing around figures and relating one story to another. Mr Hinds now completes the triumvirate when he asserts, in clear contravention of the law, that he had authorized the transfer of the licence from Synergy to Sithe, something which only the President is authorized to do.

PM’s understanding
There is nothing about the project that Mr Hinds says now or has said before to suggest that he knows anything about the law relating to hydro-electric power or the facts pertaining to Synergy/Sithe. The law provides for the payment of rent and royalties under an interim licence; the publication by the Chief Works and Hydraulics Officer in the Gazette of any application for a licence; the posting of a bond as security for performance; that “a licensee shall at all times have an office in Georgetown”; that the licence must state “the date of each permit and extension thereof which may have been issued in favour of the interim licensee; and a statement whether the requirements thereof and of the Regulations [published under the Act] have been fully complied with by such interim licensee.”

Exactly one month ago, on Friday April 15, 2011, in the face of mounting confusion sowed by Luncheon and Jagdeo on the one side and Synergy and Sithe on the other, I publicly asked Dr. Luncheon to use his influence to have publicised “the licence(s), extensions, agreements including that of May 2006, and the terms and conditions for cash and other inputs by the government towards the Amaila Hydro-electric project.” This has not been done.

The triumvirate could not make available what the law requires but suddenly the Prime Minister shares the details of the agreement which Mr Motilall had concluded with Sithe, including the US$5 million dollars in “cash and unpaid time since 1997 in helping to develop the Amaila Falls Project.” Does Mr Hinds not know that “pioneers” also make side deals and that the costs he claims Mr Motilall expended are not reflected in the financial statements of Motilall’s company?

Pioneer’s profits
In matters relating to Amaila Mr Hinds has shown a remarkable tendency to mis-remember and mis-speak, and anyone who takes his words seriously risks being misled. What is very clear is how poorly the Prime Minister is informed about the project and how little he appears to care about its consequences for the consumers and taxpayers of this country. He did give an indication of how much Mr Motilall will benefit from his pioneering efforts by volunteering that “depending upon the profitability of the project the pioneer would receive multiple of his investment in cash and time.” A multiple of two means twice US$5 million, a multiple of three means three times, etc. With Sithe being the most expensive hydro-electric developers in the world, there are several multiples accruing to Mr Motilall. That licence should have been cancelled, but it was not. Did I hear someone say Simon and Shock International Logging Inc and Vaitarna?

China Railway
At what was described as a forum to consult with the public, Sithe billed China Railway as the contractors for the construction of the hydro-electric plant, although under questioning its senior officers admitted that there was as yet no contract between Sithe and China Railway. What is particularly interesting is that the China Railway Group lists on its website its core business as railway construction and including “infrastructure construction, survey, design and consulting services, engineering equipment and components manufacturing, as well as property development.” Despite extensive search on the group’s and its subsidiaries’ websites, I could find no trace of the Chinese company being engaged in hydro-electric plant construction. It is difficult therefore to comment on the confidence which Sithe is placing in the China Railway Group as their preferred contractor.

Guyana and GuySuCo are reeling from lack of demonstrated expertise by Chinese contractors for the Skeldon Sugar plant which cost the country nearly two hundred million United States dollars. We as a country would want to avoid a similar experience and should do our own due diligence on the Chinese Railway. We have been far too gullible in the past, at great cost to the country.

Sithe’s contribution
At the consultation at Tower Hotel, we were told that the total project cost was US$675 million and that Sithe’s principal – the Blackstone Group – was putting in US$200 million in cash, a proposition not borne out by other information. President Jagdeo not too long ago had announced that the final cost for the hydro will be US$306 million, the transmission line US$145 million through a public tender and US$150 million is there for contingency and interest cost.” That leaves US$75 million of the US$675 million to be accounted for.

It is unusual for a fixed price contract to have a contingency but even a 10% contingency would amount to only US$45 million, so that the interest cost during construction will be $105 million. If as Sithe’s representatives said, Blackstone is putting in US$200 million and we know the government plans to put in US$70 million of Norwegian funds, then the balance needed is US$181 million, to finance expenditure progressively over the 3-4 years construction phase. If the interest is a minimum of $105 million during construction, one is looking at an interest rate of in excess of 30%!

But there is more. Blackstone is an investment and advisory firm that specialises in putting deals together, not financing other people’s projects. As its website states their “alternative asset management businesses include the management of private equity funds, real estate funds, [hedge fund solutions], credit oriented funds [and] publicly-traded closed-end mutual funds .. and various financial advisory services.”

Sithe’s role therefore appears to be a higher form of deal-making than Motilall’s, putting no money into the company but walking away with tons of money as the project’s developer. Needless to say, it is the country’s consumers and taxpayers who will pay.

Electricity cost
The interest cost referred to by President Jagdeo only goes up to the point of completion. If at that stage the project would have cost US$675 million, interest for the duration of the licence will cost hundreds of millions again. The management of the Guyana Power and Light Inc and the Public Utilities Commission need to get involved.

But at this stage they, the taxpayers and consumers are either in the dark or totally quiet, with no clue as to the price consumers will pay for electricity when the hydro-electric power starts to flow. The information I have is that any savings on fuel costs will be used to pay interest costs so that while the country will save on the fuel bill, the consumers will not be better off, at least for a couple of decades. That probably sums up the Amaila deal and sub-deals.

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Does Dr Luncheon not know that Synergy and Harza were granted a licence in 2002 to develop a hydroelectric plant at Amaila and that Synergy became the sole licencee in 2004?

I thank Dr Roger Luncheon for his attempt by way of a press release issued through his office to educate me about the Amaila Falls Hydro-Electric Project (AFHEP). In the release, Dr Luncheon kindly suggested that if I and others like Dr Janette Bulkan want to move from the “periphery of public discourse” – to which he has banished us – onto ground where we will be respected by governments, civil society and international organisations, then we need to start getting our facts right. Respect from any government that deprives citizens of their fundamental rights, ignores the constitution and the rule of law, tolerates and itself engages in suspect, secret and unlawful transactions, practises nepotism and discrimination and is inept and incompetent is not something I would ever wish or welcome. And as for civil society and international organisations, I take it that even Dr Luncheon could not be so bold as to think he can speak for them.

Devoting part of his statement specifically to me, Dr Luncheon said that a letter I wrote in the press on Monday, April 11, 2011 (‘Serious questions remain about the LCDS…’), proves that I do not “understand the basics” of what is being proposed for Amaila Falls. These were his words: “He [Ram] repeatedly claims that the Amaila Falls Hydro Power project is being built by Mr Fip Motillal and Synergy Holdings. This is not true – the project is being built by the Sithe Global group of companies.”

Let me reciprocate in a mutual education exercise with Dr Luncheon by quoting from Synergy Holdings’ website: “Synergy Holdings Inc. is involved in this project (The Amaila Falls Hydro-electric Project (AFHEP)) as the developer to design, build, own and operate a hydroelectric plant in Guyana.”

Let us assume that that is what lawyers call ‘puff,’ or ‘big talk’ to use a more popular phrase. Does Dr Luncheon honestly not know that in 2002 Synergy and Harza International were granted a licence by the Government of Guyana under the Hydro-Electricity Act Cap. 56:03 for the development of a hydroelectric plant at Amaila Falls? And that the licence was amended and extended in 2004 when Harza pulled out leaving Synergy as the sole licensee? And that the licence was again extended in 2006 for one year?

For Dr Luncheon’s benefit, let me quote from the preamble of a Memorandum of Agreement dated May 23, 2006 between Synergy, GPL and the Government of Guyana on whose behalf no less a person than Prime Minister Sam Hinds signed.

“WHEREAS, SYNERGY proposes to construct a hydroelectric plant at Amaila Falls in Region 8 of West-Central Guyana, has conducted a detailed feasibility and an Environmental Impact Assessment (EIA), and has received a licence from the GoG and an environmental permit from the Guyana Environ-mental Protection Agency to construct the Amaila Falls Hydro Power project…”.

Perhaps Dr Luncheon thinks that by recruiting Sithe as contractors or project managers, Synergy is relieved of its obligations, liabilities and responsibilities under the licence. If so, he could not be more wrong.

It is worth noting that Dr Luncheon avoided my question about the basis and logic for the government putting LCDS money into a project which reverts to the state after a defined term. Instead, he diverts into a discussion about Sithe with which Synergy seems to have worked a deal which leaves Mr Fip Motilall to make money simply by playing the role of speculator and being the President, Chairman and CEO of what is turning out to be a government-financed/guaranteed company, using precious national and natural resources covering thousands of acres.

It is dangerous when the Head of the Presidential Secretariat, Cabinet Secretary and chief spokesperson of the government is not only badly informed but is unable to understand the implications of the increasingly reckless decisions by the government even in the light of what are simple, clear and direct questions. Even as he accuses me of lacking basic understanding, I respectfully offer a word of advice to Dr Luncheon, who I think is a good and well-meaning man: among his colleagues in Cabinet and government, are few persons on whom he should rely for accuracy of information, integrity, competence, moral rectitude and courage.

Dr Luncheon is a busy but clearly tired and overworked gentleman, of whom any expectation of a continuing public exchange concerning the facts about Amaila, Synergy, Mr Motilall and LCDS money would be unreasonable. So instead, I ask him to use his influence to have publicised the licence(s), extensions, agreements including that of May 2006, and the terms and conditions for cash and other inputs by the government towards the Amaila Hydro-electric project. That would be immensely helpful to persons including Dr Bulkan and me.