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Hydro-electric Power (Amendment) Bill passed – Debt Ceiling motion passed at $50B

 

In a rare move in the National Assembly, the defeated Government-piloted Hydro-Electric Power (Amendment) Bill and the debt ceiling motion — both critical to the closure of the Amaila Falls Hydropower Project (AFHP) — were brought back to the House and approved with the support of the Alliance For Change (AFC) during Wednesday’s marathon Sitting that lasted approximately 13 hours.

The start of Wednesday’s lengthy sitting of the National Assembly

 

In a sitting that began at about 2.00 pm (14:00 hrs) on Wednesday and ended at 3.00 am (03:00 hrs) on Thursday, the bill and the motion were debated after a motion was brought by Prime Minister Samuel Hinds to suspend the relevant Standing Orders, allowing the items to be inserted onto the Order Paper for that sitting.

The bill and the motion had been defeated through the non-support of both Parliamentary Opposition parties on a July 18 sitting.
Items that are defeated in the National Assembly are usually not allowed to be brought back in the same session of Parliament; but because of the significance and importance of those two items, they were allowed, signalling an unprecedented move in the history of the Guyana Parliament.

 

The PM’s motion to “resurrect” the items was supported by the AFC, but on condition that they be inserted as the last two items on the Order Paper.

 

The Hydro-Electric Power (Amendment) Bill, which unfortunately did not get support from the main Opposition party, APNU, is necessary to bring the local law into conformity with the environmental standards of possible Amaila Project financier – the Inter-American Development Bank (IDB).

 

Moreover, a motion to increase the debt ceiling on external loans was approved, also with the support of the AFC. However, the debt ceiling was increased from $1B to $50B, as amended by the AFC, and not to the $130B which was proposed by the Government.

 

In the July 18 sitting, the Government had initially proposed an increase in the debt ceiling from $1B to $150B; but after that motion was defeated, the Government reconsidered and proposed that the ceiling be increased to $130B instead.

 

The new debt ceiling of $50B is to be reviewed in three months.

 

The adjustment to the debt ceiling on external loans is necessary in order to guarantee the Guyana Power and Light (GPL) meeting its financial commitments under the Power Purchase Agreement (PPA) in respect to the Amaila Falls Hydropower Project.

 

In presenting the bill to the National Assembly, PM Hinds noted that the move to bring it back was “unprecedented”, but he said that Amaila is worthy of such unprecedented action.

 

He said the construction of Amaila would bring into realisation one of the long-held aspirations of the people of Guyana.

 

Hinds posited that the cost of generating electricity currently averages $47.18 per kilowatt hour (kwh), but this is raised to $69.68 per kwh, taking losses into account, by the time it reaches the consumer.

 

He said that with the AFHP, the generation cost would be reduced to $24.72 per kwh, which itself would be increased, assuming there is no improvement in the losses, to $36.35 per kwh on arriving at the consumer. This represents a reduction of $33.33 per kwh for the consumer.

 

The Prime Minister further pointed out that the project would also lead to reduced imports on petroleum. He said that the cost of petroleum imports for which Amaila will substitute is currently at approximately US$200M per year.

 

He related that the Government of Guyana would be subjected to average payments of about US$100M a year over 20 years; but thereafter, when the plant has been transferred to Guyana, generation cost could be lowered to three or four US cents per kwh.
PM Hinds pointed out that there are some understandable concerns that the Government should obtain financing at the lowest rates possible: “I would like to assure the members of this House and our Guyanese public out there that this government has been using every strategy and tactic, every argument, to obtain the very best rates for the people of Guyana,” he asserted.

 

He noted that whilst the starting rate of return for nearly all such equity projects is 25 percent, Sithe Global is accepting 19 percent.
However, APNU’s Carl Greenidge made it clear that APNU would not support the bill. He claimed that not a single document was provided to substantiate any of the benefits outlined by the PM. He also alluded to some confusion on the part of the Opposition as to the cost of the AFHP, noting that he has seen three different figures.

 

“The responsibility of the Government is to ensure at this point that when the bill or the motion is laid before the House, the latest figures with which they work are before us,” he said.

 

Public Works Minister Robeson Benn, who spoke in support of the bill, explained that the amendments to the existing Hydro-electric Power Act would allow for an offset area with respect to the management, protection, and mitigation of environmental damage for the project, so that a specific project goal with financing implications could be met to advance the project.

 

He emphasised that the AFHP is the single most important economically transformative project that has been attempted within the last 20 years, asserting that if the House is unable to pass the amendments, given the present situation of the project, it would reflect “criminal negligence” on behalf of the Parliament.

 

AFC’s Moses Nagamootoo rose on behalf of the AFC to support the bill, but not before raising some concerns. He particularly took great offence at Minister Benn’s statement of “criminal negligence”.

 

“The abuse of calling us here criminals, of saying that if we did not support, we would be guilty of criminal negligence,” he lamented.
Following the debate, PM Hinds attempted to clarify some of the issues raised by members of the opposition, after which the House voted on the bill. This vote saw AFC voting with the Government for the passage of the bill, while APNU voted against.

 

DEBT CEILING

 

Meanwhile, Finance Minister Dr. Ashni Singh presented the motion to increase the debt ceiling on external loans from $1B to an amended figure of $130B. He stressed that it was the time for a decision to be made, as the world is not standing still.

 

“The reality is that the world is not standing still. Large international partners, credible international institutions, have a decision to make, and Guyana is not their only client; Guyana is not the only potential destination for their investment,” he remarked.

 

He reported that the “fact of the matter” is that all of the analyses suggest the AFHP is good for Guyana; and further, that detailed analyses indicate it is indeed the least cost option for the country.

 

The minister pointed out thus: “The mere fact that a large credible international institutional investor of the size and scale of the Blackstone Group is involved in this project, and the manner in which they are; the mere fact that they would mount teams to visit Guyana…to speak to stakeholders in Guyana…should say something to us.”

 

He added that the AFHP is a privately-funded project for the greater part, noting that the private is not an unknown or insignificant entity, but a major internationally recognised and respected institutional investor.

“So all those who beat their chests and say that they want to attract investment to Guyana, here is your opportunity,” he urged.
APNU’s Carl Greenidge again rose on behalf of his party to express that APNU would not support the motion. He said that party believes there are still some questions that have not been satisfactorily answered.

 

According to him, APNU has had exchanges with the Government, following which he has not “seen them change anything whatsoever.”

 

Leader of the AFC, Khemraj Ramjattan, said that the AFC would support an increase in the debt ceiling only to $50B, and accordingly, he presented an amendment to that effect. The Government agreed to that amendment, and subsequently the AFC voted with the Government in favour of the debt ceiling being increased.

 

The motion was carried as amended, and is to be reviewed in three months’ time.

 

Source: http://www.guyanachronicleonline.com/site/index.php?option=com_content&view=article&id=62608:-hydro-electric-power-amendment-bill-passed-debt-ceiling-motion-passed-at-50b&catid=2:news&Itemid=3



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