‘Fip’ Motilall secures US$12M for selling hydropower licence to Sithe Global
Makeshwar ‘Fip’ Motilall will receive at least US$12 million in profit from the entire affair.
Synergy Holdings was originally awarded the contract to construct the Amaila Falls Hydro Power
Plant but after failing to secure financiers to back the project, was forced to sell his licence to Sithe Global.
A recent visit to Guyana by the top brass of Sithe Global, including its Chief Executive Officer Bruce Wrobel, afforded a chance for an answer to be had to the cost of the licence to Sithe Global.
Apart from disclosing Sithe Global’s rate of return on its US$152M investment in the hydroelectric project is 19 per cent, Wrobel also disclosed that Motilall will be walking away with some US$12M for flipping his licence to that company.
“Synergy is entitled under the agreement of the transfer of that asset to financial compensation upon successful completion of the project.”
Those were the words of James McGowan, Senior Vice President (Development) at Sithe Global and Wrobel disclosed this past week that the compensation will total some US$12M.
Wrobel says that the company is attempting to place a new face on things today as a result of the previous lamentations on the silence of all partners involved
“Our role is very clear….we are a builder, a designer, a developer of energy projects….we have never really encountered a situation before where the politics is so intermeshed in the power situation,” Wrobel said as he sought to explain why the company had remained silent for such a long time.
Wrobel said that the money will include some of the early preparatory works such as feasibility studies but should the project successfully close then Motilall earns some US$12M.
“His expenses including early works, come out of that,” Wrobel told this publication.
Synergy Holdings Inc. was first listed as the developer to design, build, own and operate a hydroelectric plant in Guyana.
In 2002, Synergy Holdings and Harza International were granted a licence by the Government of Guyana under the Hydro-Electricity Act for the development of a hydroelectric plant at Amaila Falls.
The licence was reportedly amended and extended in 2004 when Harza pulled out leaving Synergy as the sole licensee. The licence was again extended in 2006.
Synergy Holdings was granted a US$15.4 million contract to build the access roads to the proposed site for the hydropower plant. That contract was rescinded on January 12 last.
Synergy Holdings Inc in 2007 identified Sithe Global as a potential investor in the project.
In 2008, Sithe Global put out to tender, the Engineering Procurement and Construction (EPC) as part of the program and after vetting five bidders, China Railway was chosen as a contractor.
Synergy Holding’s Licence was formally transferred the following year to Sithe Global.
Motilall is himself no stranger to controversy as investigations found a plethora of evidence suggesting that Motilall could not have undertaken the Amaila Falls road.
The Amaila Hydropower Project is a planned hydroelectric project (approximately 165MW capacity) to be located in western Guyana.
The project also includes a new 270 km transmission line and new substations near Georgetown.
JANUARY 20, 2012 | BY KNEWS | FILED UNDER NEWS
…backing out will incur ‘onerous penalties’-Dr Luncheon
There is a convention that prevents incumbent governments from entering into new contracts, signing new agreements and undertaking new projects in the weeks leading to elections.
However, former President Bharrat Jagdeo signed some multi-million-dollar contracts and committed the new government to the binding contracts.
Executive President Donald Ramotar, his administration and by extension the country are now bound to the contractual obligations that have been negotiated and signed into effect by Bharrat Jagdeo.
This was confirmed by Head of the Presidential Secretariat, Dr Roger Luncheon, who conceded that the government cannot cancel these contracts and agreements causing the country to incur onerous penalties.
Some of the ‘secret deals’ signed onto by Jagdeo just weeks and days before the elections include the US$52M Marriott Hotel project, the US$140M extension of the Cheddi Jagan International Airport and the US$835M Amaila Falls Hydro Electric Plant.
There was also the US$40M communication cable from Brazil that is being installed with Chinese labour.
Dr Luncheon, who was at the time being questioned about the international contractual obligations that Jagdeo has committed Guyana to.
First pressed on the exit clauses embedded in the agreement with Sithe Global for the Hydro Project, Dr Luncheon said that he preferred to defer the questions to Winston Brassington of the National Industrial and Commercial Investments Limited.
Dr Luncheon suggested that Brassington would be the better person to answer the queries given that he is much more “current than I am and his comprehensive grasp of the issues surrounding the main activity (the building of the hydropower facility) far exceeds mine.”
The Cabinet Secretary told the media that in each of the instances where agreements have been inked there is embodied in those agreements commitment and obligations by both parties.
He said that while there is absolutely nothing that prevents the agreements from being rescinded it is not simply a case of one party “just backing out.”
Dr Luncheon explained that in most cases there is a process with conditions under which this would be done.
He pointed to an example in the Hydropower agreement where there is a “force majeure” and a number arrangements that cater for unforeseen and unlikely events but warned that these are things that “the lawyers address in the body of the agreement to say that in these instances, were the agreement to lapse here is to say that who is at fault and here are how they are to be dealt with.”
“Force majeure” is a common clause in contracts. It essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term act of God (such as hurricane, flooding, earthquake, volcanic eruption, etc.), prevents one or both parties from fulfilling their obligations under the contract.
When pressed to simplify whether the Government can back away from the projects Dr Luncheon said that “it cannot be done without cause…it cannot be just, I feel like backing out…these things carry onerous penalties.”
Dr Luncheon illustrated his point by drawing reference to neighbouring Trinidad and Tobago where the Patrick Manning administration had committed that administration to have “built and even supply considerable security hardware…They had committed to spending enormous sums of money.”
He said that when the new administration took office the Kamla Prasad administration pulled the plug on the project, “at tremendous cost to the taxpayers of Trinidad.”