Tuesday, 03 January 2012 02:31
By caribarena news
Antigua St John's - Seven years ago, Ambassador David Shoul approached the prime minister and proposed an alternative to solve Antigua & Barbuda's energy generation problems.
Prime Minister Baldwin Spencer gave Shoul the green light to proceed with negotiations with the Chinese. In December 2005, the Chinese minister of construction, while visiting Antigua & Barbuda, was a victim of the recurrent power outages.
Ambassador Shoul seized the opportunity, and requested assistance from the Chinese government via this minister. Sometime after that, a presidential order was issued in China, with instructions to assist Antigua & Barbuda with the construction of a 30 MW power plant. Shoul would later say, during the handover of the plant, "The project was conceived keeping in mind the best and long term interests of the people."
Fast track to present day, and the picture has changed dramatically. The Chinese power plant has been completed, and Antigua & Barbuda has signed the concessionary loan, but the plant faces myriad speculation and mystery.
From the legitimacy of the agreements to the technological level of the power plant, the answers are elusive. Some light has been shed on the concessionary loan and its implications, but the true value of the power plant, and whether it will become a benefit or a burden, remains unknown.
As many of our readers may remember, there was a very similar East Timor Project which included engines supplied by the same Chinese company, Xi'an Marine Equipment Engineering Research Academy (XMEA). It turns out that the engines that were installed in East Timor had been manufactured over 20 years before, were second-hand, and hazardous to the environment (http://www.theage.com.au/world/east-timor-hit-over-dirty-power-plants-20090403-9qqc.html).
The company contracted by the East Timor government, the Chinese Nuclear Industry 22nd Construction Company, installed the generator sets that were purchased from the XMEA.
In Antigua's case, Beijing Construction Engineering Group Co Ltd purchased the generator sets from the same XMEA. The following web page is a release issued by XMEA regarding the Antigua & Barbuda project, as well as the East Timor project: http://www.csic-xmea.com/english/xwzx-xx.asp?id=60
. Meanwhile, the East Timor people were not aware that the engines were used. It was only when the media studied the environmental hazards that the true nature of the generator sets was revealed.
In 2008-9, the World Bank urged the government of East Timor to “cancel the contract, absorb the penalty, and re-tender the project.” In 2010, the East Timor government cancelled its contract with the Chinese 22nd Construction Company, and hired an Indonesian company called Puri Akraya Engineering Ltd, which purchased new Wärtsilä engines to finish project. For further reading, check:http://www.smh.com.au/environment/e-timor-counts-costs-of-chinese-power-plants-20101214-18wx8.html
When the Chinese 22nd Construction company submitted its proposal to the East Timor government in June 2008, it offered two routes. The East Timor government could choose 19 used engines at US$4,500,000, or 19 new engines at US$88,000,000. The government purchased the new engines. If you remember the XMEA article on East Timor, XMEA stated the project was valued at 540 million RMB.
That deal was made on July 1, 2009, a year after the submitted proposal to the East Timor government. If you convert US$88 M to RMB, today, it is equivalent to $556 million RMB. This difference in price could be attributed to the appreciation of the Yuan Chinese dollar. Does this mean the East Timor government paid for new engines, and received used engines from 1987?
But how is this relevant to Antigua? Do the same circumstances apply here as they did in East Timor? We are in a very similar situation with the same company. In order to protect the interest of the people of Antigua & Barbuda, the government should try to remove the veil that clouds its vision. Not everyone who speaks out against the project is a “naysayer,” and there may be existing issues which the government did not foresee and engineers could not diagnose.
Unlike East Timor, Antigua is not rich in oil, and will not be able to purchase a new Wärtsilä power plant because the Chinese power plant didn't work out as expected. Additional measures, possibly even an international investigation, should be launched to make sure we will not be locked into a concessional loan for a power plant that isn't worth the cost.
*Note to Reader: The first two images in this slideshow are NOT from the new 30 MW Chinese Power Plant. The first image is of an identical engine model to the ones installed in the Chinese Power Plant. It was manufactured in 2007, and can run on HFO (Heavy Fuel) and Gas, as opposed to the Chinese Power Plant, which requires HFO fuel. The second image is of a new MAN B&W D48/60, the top-of-the-line state-of-the-art engine.
“What you hear about may be false, but what you see is true.” - David Shoul quoting a Chinese proverb during the handover of the 30 MW power plant.
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