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| – Former Auditor GeneralThe raising of the debt ceiling guarantee for public corporations and the setting aside of the reserve offset, specifically to cater for the Amaila Falls Hydro Electric Project, will come up for a vote in the National Assembly this week, but local financial experts are still up in arms over the US$858M price tag.Former Auditor General Anand GoolsarranFormer Auditor General Anand Goolsarran believes that the project could cost US$320M less, but this could only happen if government opts for a different ‘financing structure’ and includes more equity partners,Fj?llr?ven K?nken Rea, as against just Sithe Global and Government.The current financing structure sees the project being built using 70 per cent debt, or money being borrowed from the China Export Import (EXIM) Bank and the Inter-American Development Bank (IDB). The servicing of this debt comes at a cost of US$97.1M. This is in addition to the US$35M being paid in lenders’ fees and advisory services, paid to an undisclosed Chinese entity.Financing of the money being borrowed also comes with, ‘debt political risk insurance’ to the tune of US$187.7M, bringing the total cost of financing the loans for the project to US$319.7M.According to Goolsarran, this financing cost of US$320M, can be avoided if the equity base can be broadened by Government, as well as bring on board additional shareholders.He says that even if Sithe Global and Government agree to put more money into the project, as against borrowing,Cheap Air Max Womens, the total cost of the project can be brought down.Guyana is plugging US$100M into the project while Sithe Global is putting in $157M.For its share of money being put into the project, Sithe Global will assume 60 per cent ownership while Government will own 40 per cent.Regarding Guyana’s ability to put more money into the venture, Goolsarran pointed to the Government’s latest audited accounts which state that it has net cash resources of US$315.5M.He says too that there is an amount of US$454M reflected in the Monetary Sterilization Account which was set up to capture the proceeds of the issue of medium term Treasury Bills.“Without the risk of jeopardizing payments for the redemption of Treasury Bills,Stitched Buffalo Bills Jerseys, can the government not use some of this to boost its equity contribution?”He asks also whether the shareholding base cannot be extended to include partners,Cheap Jerseys From China, other than Sithe Global and Government. This he posits would relieve the extremely high financing arrangement for the loans.LEGAL IMPLICATIONSRegarding the proposed raising of the debt ceiling, Goolsaran says that it is important to note that under the Guarantee of Loans (Public Corporations) Act, the Government is obligated to guarantee loans by Public Corporations with respect to a “lending agency.”He points out that the only guarantee Sithe Global has requested,Cheap Football Jerseys College, relates to the payments to be made by GPL to Amaila Falls Hydro Inc.,Wholesale Fashion Shoes Australia, the special purpose company established for the construction and operation of the plant.It is also the company that receives the loan from the China Exim Bank and the IDB, and according to Goolsarran, is not a “lending agency.”As such, he believes that there will be legal implications were the government to guarantee payments to be made by GPL to this company.Valid ConcernMeanwhile the Former Auditor General has responded to the government’s attempt to discredit comparisons to a Pakistan Hydro Power Plant.It was pointed out during a recent consultation that the Pakistan Plant does not include a transmission line or an access road. Goolsarran however said that even if one were to remove those two aspects of the local project, its per megawatt cost, would work out to US$4.1M.This would still make it 68 per cent higher than the Pakistani plant.Goolsarran lamented further that “the government did not comment on the hydro electric facilities in the other five countries,Discount Nike NFL Jerseys, where the average cost is US$2.3M per MW.”“The high cost of the Amaila Project therefore remains a valid concern,” Goolsarran concluded. |
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