On Monday, Guyana’s Finance Minister, Winston Jordan, presented the state budget in Parliament. In his speech, he slammed the proposed Amaila Falls hydropower dam, the flagship project of Guyana’s Low Carbon Development Strategy.
Bergens Tidende reports that Per Fredrik Ilsaas Pharo, Director of the Government of Norway’s International Climate and Forest Initiative, will be visiting Guyana next week. Pharo told Bergens Tidende that,
“The purpose of the meeting is to get a full briefing on the new government’s policies for forest conservation and low emissions development.”
There will be plenty for Pharo to talk about while he’s in Guyana.
Norway’s rainforest generosity drying up?
Just days before Guyana’s election, Norway handed over US$40 million to Guyana, “for maintaining low deforestation rates and improving forest governance”. That brought the total of Norway’s naive generosity to President Bharrat Jagdeo’s regime in Guyana to US$190 million.
However, with a newly elected government in Guyana, Norway put the brakes on payments. Development Today reports that a payment of about US$38 million was put on hold in June 2015.
In March 2015, Guyana’s Office of Climate Change hired a Washington DC public relations firm, Outreach Strategies to promote the Low Carbon Development Strategy. Stabroek News reports that Outreach Strategies would, “promote the LCDS inclusive of endorsements by ‘celebrities’ within Guyana and external stakeholders of international standing”.
Outreach Strategies’ US$250,000 bill was paid with money from Norway’s rainforest initiative. It’s not entirely clear what Outreach Strategies accomplished with this money (apart from producing a few info-graphics and tweeting about them).
Perhaps Pharo could ask a few representatives of Guyanese civil society whether they believe this to be a good use of Norway’s money.
Billion dollar dam
He could also ask about the Amaila Falls project, the estimated cost of which has spiralled from US$325 million to almost US$1 billion.
The Amaila Falls hydropower dam has been stalled since 2013, when the project developer Sythe Global pulled out. The Inter-American Development Bank was one of the funders of the proposed dam, but with Sythe Global gone, the project was removed from the Inter-American Development Bank’s project pipeline.
Nevertheless in April 2015, Norway paid US$80 million to the Inter-American Development Bank as part-funding for the dam.
Finance Minister Jordon’s comments on the Amaila Falls hydropower dam are below. (Stabroek News has posted the speech in full.)
Exxon’s oil and a dam with Brazil
But before we get too carried away celebrating the new Guyanese government’s green shoots, we should consider the squabble between Venezuela and Guyana over Exxon Mobil’s recent oil find off the coast of Guyana. Venezuela’s President Nicolas Maduro claims that the oil belongs to Venezuela.
The Wall Street Journal reports that Guyana’s new President, David Granger, has a message for Exxon: “Drill away”.
And at the end of this extract from his speech, Jordan talks about plans for a large hydropower dam on the Mazaruni River. Such a project would destroy large areas of rainforest and have a devastating impact on the indigenous peoples living the area.
Extract from Finance Minister Winston Jordan’s budget speech
10 August 2015
4.49 Mr. Speaker, this Government is well aware of the importance of clean, reliable and affordable energy for development and the improved welfare of our people. As such, we are prepared to explore every avenue to reduce the cost of energy – including examining the Amaila Falls Hydroelectric Project. The problem, Mr. Speaker, is that as currently configured, it would not only be irresponsible, but a downright criminal act of deception, were we to proceed with the Amaila Falls. Our investigations have revealed that at the current cost of almost $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, which will total US$2.6 billion over the 20 year commitment period of the power purchase agreement. Mr. Speaker, this does not include Guyana’s contribution of at least US$160 million (US$45 million for the road, US$80 million equity through Norway, and US$35 million loan from IDB); and the garnishing of US$65 million of our foreign reserves.
4.50 Mr. Speaker, it would be delusional to suggest that GPL has the competence to handle such a financial burden. The GPL is known to have a poor operational, financial and technical capability. The company suffers from high energy and technical losses and fuel price volatility. It would require not only massive tariff increases, but guarantees taxpayers, through the treasury, will provide transfers to meet this obligation. 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.
4.51 Mr. Speaker, I should like to remind this House that the identification of Amaila Falls as a potential site for hydropower dates back some 40 years, and that this Government would welcome the diversification of our energy matrix to include clean, sustainable and affordable sources. However, it must make financial sense! 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.
4.52 Over the next five years, we will adopt a more integrated approach to providing for our energy needs. We will examine all sources of energy – fossil fuels, wind, solar, baggasse and, of course, hydropower. We will commence feasibility studies for a large hydropower development in the Mazaruni region. This will be done in collaboration with Brazil. We will encourage independent power producers and suppliers to construct energy farms and sell energy to the national grid. We will construct and/or promote the construction of small hydro systems in areas such as Moco Moco, Kato and Tumatumari, and will power all of our new townships, starting with Bartica, using alternative energy sources.