Georgetown: The top brass for Sithe Global are currently in Guyana and met with some media operatives today at the Pegasus to clear the air on the 165MW Hydro Electric Power Plant to be built at the base of the Amaila Falls Hydro Electric Project to the tune of US$840M. The Chief Executive Officer for the Company Bruce Wrobel told media operatives that he is optimistic that there will be financial closure for the project by June of this year.
It was explained that the financial closure now hinges on the go ahead for the loan to the tune of US$175M from the Inter American Development Bank (IDB).
The officials explained that the three main concerns of the IDB lies with the Environmental Studies and the impact of the project, the Guyana Power and Light’s (GPL) ability to manage the project as well as make the necessary repayments taken into technical and commercial losses already incurred by the power company.
The officials explained that funding for the project comes from a variety of source including US$100M in equity from the Guyana Government. Guyana has already committed US$15.4M for the construction of the access road as part of the equity with the remainder of the money on the part of Guyana coming from the LCDS initiatives such as the Memorandum of Understanding signed with Norway for some US$250M
With the IDB’s approval of the loan for the Hydro Electric project it is also expected that the World Bank would be more subservient to the release of that money.
Wrobel told media operatives that some 70 percent of the total funding will be coming from the China Development Bank and the IDB. The IDB is being sought after for US$175M while CDB will be pumping some $413.2M. The two combined once financial closure is reached with the IDB will be putting some US$588.2M
Guyana’s equity is expected to be US$100M while Sithe Global will be putting US$152.1M bringing the total project cost to US$840M.
In seeking to explain why the cost of the total project has escalated over the past few years the Sithe Global Official explained that it is primarily due to the increased cost of commodities as well as the appreciation of the Chinese currency against the US dollar.
In terms of how the money will be used the officials explained that the Engineering Procurement and Construction (EPC) cost of the actual project will be some $519.6M. The total capital costs for the project according to the Sithe Global Officials will be $652.5M taking into consideration additional construction, Development, Start-up as well as a contingency among others.
The remaining US$187.8M will go towards financing costs which includes Interest during Construction, Lenders Fee and Advisory Cost and Debt Political Risk Insurance.
Speaking to the actual construction of the hydro-electric plant the official explains that of the $519.6M in total Capital Expenditure the plant is expected to cost US$314M with the Transmission Line being some US$126M with the additional US$79M for currency adjustments.
As it relates to repayment should the project go through on schedule the projected tariff is some US$114M and will reduce by 40 percent after 12 years when the loans have been repaid.
At a projected average tariff of US$101M the plant is expected to rake in more than US$2B over the 20 year period on the Build Own Operate and Transfer (BOOT) life of the project.
The plant is slated to last for some 55 years more.
As it relates to the critical nature of the financial closure Wrobel said that should this not become a reality soon then Guyana could see the project being put on the back burner for the next five to 10 years.
As it relates to the access road project where the Government recently terminated its contract with Synergy Holdings Inc, Wrobel says that he is confident that the administration is cognizant of the importance of the road and will ensure its completion. He at one point even suggested that Sithe Global may be willing to incorporate the access road project into the larger project rather than lose on all of the gains made thus far. He said that already Sithe Global has invested some US$11.1M.
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