Guyana has lost a major chance to advance its economic development – Former President Jagdeo

Georgetown, GINA, August 15, 2013

The debacle with the Amaila Falls Hydro Power (AFHP) Project has been described by former Head of State Bharrat Jagdeo, as a significant loss to the entire nation due to ‘partisanship and ignorance’ as the opportunity for Guyana to press forward with its development has been scuppered.

The recent pull out of major international partner, Sithe Global due to lack of political consensus, has placed the AFHP in jeopardy. Financial closure to the project with the Inter American Development Bank (IDB) was within reach, and the US$30M Government funded road to the Region Eight site was expected to be completed by the end of this year.

Charlatan economics

 

Delivering brief remarks during the closing of the National Economic Forum at the Guyana International Conference Centre today, the former head of state said that some of those who opposed the transformational project employed ‘charlatan economics’ and cited the figures given by activists such as Christopher Ram, Ramon Gaskin and Professor Clive Thomas as being completely off the mark.  “They killed the hydro because of that,” he said.

 

Not a single cent of debt

With respect to criticisms being touted of the debt that would be incurred and which would become the taxpayers’ burden, he said, “There is not a single cent of debt, outside of the money that we are spending on the road and the equity that we are taking that will accrue to this country, and yet we heard that is too high a debt that we are worried about, that’s why we didn’t approve the project.”

The former president said that funds for projects such as those of the magnitude of AFHP were not easily available, and as such, it was a lost opportunity for the nation.

He used the example of proposed changes by the United States of America’s Federal Reserve in the way it may intervene in the stock market. These measures by the US government have not even been implemented, yet the financial fallout has already affected stock markets in the economies of Russia, the United Kingdom, Japan and other developed nations, he said.

This was one clear indication that despite an apparent recent upturn in the economies of many nations, their financial capacity and ability were all interlinked and could rapidly change.

The former president said a significant portion of what he described as the local ‘financial cabal’ were ‘happily oblivious’ to the implications of the possible spinoff effects from other nations’ financial challenges. He reminded stakeholders that Guyana’s economy was linked externally to a world that was changing rapidly, and this should always be taken into consideration.

 

Biggest defeat for competitiveness

 

Stressing that cheap energy is essential for the future of industrial growth, the former president said that the loss of the Amaila project would be the biggest defeat for competitiveness and advised that as a nation, “We can’t keep shooting ourselves in the foot”.

Guyana needs hydro power now more than ever, he said, as the cost of power will inevitably increase and the price per kilowatt of electricity from the AFHP would be approximately 11 cents less than the current cost. This will reduce further once it was handed over to the country in 20 years as stipulated.

He questioned the wisdom of opposition politicians whom he reminded of the US$300 million spent in the late 1970s and early 80s by the People’s National Congress government to start the initial hydro power plant in the Mazaruni area. This money, which adjusted for inflation amounts to over US$2 billion, and is still being repaid. It was all for nought since Guyana failed to gain anything from it, he noted.

He said that while healthy political debates and arguments were necessary for any democracy, the interests of the country must always come first, and reminded stakeholders that, “We can’t lose sight of the big picture”.

The AFHP promises noteworthy reductions in power outages, electricity tariff, fuel utilisation savings by 90 percent and the stimulus to economic development, particularly in the processing and manufacturing sectors

Political consensus from all Parliamentary parties, which Sithe Global said was critical to their investment, was not had as the A Partnership for National Unity voted down the   Hydroelectric Amendment bill and accompanying motion. The Alliance For Change, while it supported the bill, reduced the debt ceiling from $130B to $50B.

After 20 years, AFHP will be 100 percent owned by Guyana, and is expected to last for 100 years. The additional benefits of the AFHP are tremendous as the investment can see Guyana reaching growth rates of more than 10 percent per annum.

An International Monetary Fund (IMF) report states that the project is expected to save GPL consumers approximately US $3.5B over 20 years through tariff reduction. It will lessen the country’s fuel import bill by about 20-25 percent resulting in savings of over US$90M on fuel imports.

Additionally, the project will add six percentage points to real GDP growth during the construction phase alone.