The Government of Guyana has ditched its plans to build a $2.6bn hydropower project, saying it was too expensive.
Guyanese Finance Minister Winston Jordan was quoted by Associated Press as saying that the cost would be more than double the country’s external debt.
The 165MW Amaila Falls project was intended to deliver cheaper energy, particularly to rural jungle communities.
Jordan said at the current project cost of about $1bn, Guyana Power and Light (GPL) would be required to make annual payments amounting to $130m to the operators of the facility.
The payments would add up to $2.6bn over the 20-year commitment period under a power purchase agreement, excluding Guyana’s $160m funding and $65m of foreign reserves.
The Amaila Falls was identified as a potential site for hydropower about 40 years ago.
Jordan noted that the new government would welcome the diversification of the country’s energy matrix to include clean, sustainable and affordable sources.
He however said:"It must make financial sense!"
"We know now, that as configured currently, the cost of financing is too high, and that unless the price tag can be substantially lowered, we cannot proceed."
The government is planning to start feasibility studies in collaboration with Brazilian partner for a large hydropower project in the Mazaruni region.
Jordan said the government will encourage independent power producers and suppliers to build energy farms and sell energy to the national grid.