…largest private investment in Guyana
THE Amaila Hydropower Project reached major development milestones last week, with the signing of key project agreements in Xi’an, China, including the Engineering, Procurement & Construction (“EPC”) Contract and the Inter-American Development Bank mandate Letter.
This sets in motion the next phase of lender due diligence and documentation needed to reach project financial closure and begin construction, which is scheduled to start in the second quarter of 2013. The milestones demonstrate the hard work and commitment of all parties in making the project a reality for Guyana.
The EPC contract is valued at US$506M, representing the largest infrastructure contract ever executed for Guyana. Signing the EPC contract provides price certainty, avoiding the risk of commodity price adjustments for a period of nine months, during which AFH will secure the project financing. The pricing is subject to adjustment in currency fluctuation until financial closure is reached, at which time the pricing will be fixed.
Sithe Global will lead the oversight of the construction activity, using its core management team which has successfully led the development or acquisition of over 70 power plants comprising more than 18,000 megawatts globally.
China Railway, one of the world's largest infrastructure construction companies, with significant experience building hydropower plants, will build the power facility and transmission lines. The robust contractual requirements of the EPC contract require that the strength, structure and integrity of the dam and associated power plant infrastructure will be of accepted international standards. Sithe Global will closely monitor the implementation and ensure strict compliance with the standards. Further third party oversight will be conducted by the lender's engineer, the owner's engineer (MWH), one of the largest hydro engineers in the USA, as well as an independent panel of experts in dams and dam safety.
The signing of the mandate letter between the IDB and AFH represents a critical piece of the project financing scheme. This significant step forward allows the lenders of the project (IDB and China Development Bank) to proceed with the final phase of due diligence and draft the required financing documentation. AFH and project lenders are working hard to finish the financing arrangements while pushing the tariff as low as possible.
This due diligence and documentation phase is expected to conclude in nine months, which is within the window of price certainty pursuant to the EPC contract. AFH expects financial closure in the second quarter of 2013, with construction beginning immediately thereafter. The access road project is to be completed prior to commencing construction of the project. The project is scheduled to provide renewable energy three and a half years later.
The project represents the best low-cost, long-term option to reduce GPL’s average generation costs and dependency on imported fossil fuels. Sithe Global believes that the final project tariff will provide substantial annual savings to GPL and the public. The project will provide a significant improvement in the electricity infrastructure in Guyana, that will support the country’s overall economic growth and sustainable development, based on a reliable, affordable electrical grid for its industries, businesses and residents.
AFH will continue to keep the public updated as the project progresses.
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About China Railway First Group:
CRFG is one of the largest civil construction enterprises in the world, with more than 220,000 employees. CRFG, founded in 1950, is headquartered in Beijing. Northwest Hydro Consulting Engineers (“NWH”) will be working with CRFG on the project and will play a key role in the design of the power generation facility. NWH is an engineering consulting company, performing technical and design studies for large infrastructural projects in the hydropower, wind power and transport industries, as well as assisting in the management and construction of these projects.
NWH, founded in 1959 and headquartered in Xian, China, has over 2,000 employees and has been consistently ranked as one of the top design firms in China since 1992. It has been accepted by the World Bank since 1997 as the qualified consulting service undertaking design and consulting services for projects financed in China. NWH has successfully completed the engineering, design, management and supervision for over 200 hydroelectric projects, with total installed capacity of 150,762 MW.
Amaila Falls Hydro, Inc. (“AFH”) is a member of the Sithe Global group, a leading U.S.-based international energy company. The company is incorporated in Guyana for the purpose of developing, owning and operating the Amaila Hydropower Project. AFH has spent over US$11M on third party environmental, technical and legal costs associated with the development and financing of the project. AFH intends to contribute in excess of US$120M of equity funding during the construction period.
About Sithe Global Group:
Sithe Global is a privately held international independent power development company which focuses on certain target markets in North and South America, Europe, Africa and Asia. Sithe Global is led by a seasoned management and technical team with extensive independent power project development experience. The Sithe Global team has successfully developed over 70 power projects in 10 countries, representing more than 18,000MW of generating capacity. Sithe Global’s majority shareholder, the Blackstone Group, manages one of the largest private equity funds in the world, with total assets under management of approximately US$190B as of June 30, 2012. Further information is available at www.sitheglobal.com.