Amaila Falls Hydro Project — Loans of $588M will Cost Guyana US$187M in Fees During Construction Alone

The officials explained that funding for the project comes from a variety of sources 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 equity 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 hydroelectric project, it is also expected that the World Bank would be more subservient to the release of that money.

Wrobel explained that some 70 per cent 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 China Development Bank will be providing some US$413.2M.

Guyana’s equity is expected to be US$100M while Sithe Global will be providing US$152.1M bringing the total project cost to US$840.3M.

In seeking to explain why the cost of the total project has escalated over the past few years, Wrobel 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. There is also the cost of political risk insurance, something demanded by the Chinese.

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 amount to some US$519.6M.

The total capital costs for the project, according to the Sithe Global officials, will be US$652.5M, taking into consideration additional construction, development, start-up, as well as a contingency.

Brian Kubeck, Sithe Global’s Senior Vice President of Development, explains the EPC costs

The remaining US$187.8M will go towards financing costs which include Interest during Construction (US$97.1M), Lenders Fee and Advisory Cost (US$34.9M), and Debt Political Risk Insurance (US$55.7M).

Speaking to the actual construction of the hydroelectric plant the officials explained that of the US$519.6M in total Capital Expenditure, the plant is expected to cost US$314M, with the Transmission Line demanding some US$126M. The additional US$79M is for currency adjustments.

Wrobel said that the United States and other major powers are asking the Chinese to appreciate its currency by some 20 per cent.

Interest during the construction will amount to US$97.1M

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 at least 75 years. Wrobel said that usually such projects would last in excess of 100 years, since there are not many moving parts.

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 ten years.

As it relates to the access road project, where the Government recently terminated its contract with Synergy Holdings Inc., Wrobel said that he is confident that the administration is cognizant of the importance of the road and will ensure its completion.

At one point, the CEO 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.