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The African state, Ethiopia only days ago commissioned a new 5,150 megawatt (MW) Hydropower Plant on the Nile River, a project that is expected to benefit more than 60 percent of the population.
Over in South America, the government of Guyana is forging ahead with its Amaila Hydropower project pegged at US$750 million, which will generate some 165 MW of power more than five times the cost per megawatt in Ethiopia.
This reasoning was proffered by Article 13, a civil society organization which has been pressing the administration for overall good governance. The group consists of prominent Attorney-at-Law, Christopher Ram and transparency advocate Yog Mahadeo.
In a letter to the daily newspapers, the body said it was particularly not pleased with government’s wisdom of pursuing the Amaila project, given its risks associated with cost among others. On the other hand, Article 13 also raised concerns with regard to the Power Purchase Agreement (PPA) as it believes “awarding the construction contract without simultaneously entering a Power Purchase Agreement is putting the cart before the horse.”
Added to that, the civil body contended that the price tag being reported by the project Head, Winston Brassington, does not include all the costs, since both Guyana and the state controlled Guyana Power and Light Inc (GPL) will be incurring significant additional costs.
“Article 13 recalls that the earlier Amaila project was highly criticised for its price tag. This new version is not much different. Ethiopia two days ago opened a 5,000 MW hydro project at a cost of US$4,200 million or US$840,000 per MW. Guyana will be paying US$750 million for 165 MW, a unit cost of US$4.5 million per MW, or 5.3 times that of Ethiopia,” the body analyzed.
Guyana has awarded the contract to China Railway First Group under a Build Own Operate Transfer (BOOT) model. This agreement guarantees the Chinese company, purchase of all the power generated, as well as other goodies, including no hydrological risks among others.
To this end, Article 13 has warned, “At a BOOT price of US$750 million, the operator will have to recover some US$37.5 million per annum, exclusive of any interest, operating cost and profits. And of course, the deal will be sweetened by the full range of tax concessions, including a 20-year tax holiday on income, property, withholding and quite possibly employee taxes as well. And whether we utilize the power or not, we will have to pay for every unit produced”.
Making another analysis on this project a few days ago was the former Minister of Public Works, David Patterson.
He argued that the hydropower project will amount to a white elephant, given its impracticable cost.
He reasoned, “Guyana will be expending over US$1.4B and counting (Exxon–US$900M + GOG US$504M) for 250MW generating sets. This is an incredible amount, considering the fact that the current cost for 1MW of generating power is approximately US$1M. That’s correct; 250MW of natural gas-powered generating sets can be procured for approximately US$250M – yet, the Government is paying US$1.4B.”
Ethiopia Hydropower Project
Aljazeera news reported on February 20 that Ethiopia began producing electricity for the first time from its Grand Ethiopian Renaissance Dam (GERD) – a massive hydropower plant on the River Nile.
Prime Minister Abiy Ahmed officially inaugurated electricity production on Sunday from the mega-dam. The GERD is pegged at some US$4.2 million.
The news agency also reported that the project is set to be the largest hydroelectric scheme in Africa.
Importantly, the project was funded by the people and government of Ethiopia and was constructed by ‘Webuild Group’, a subsidiary of Italian construction giant Salini Costruttori S.p.A.