Government senator Jomo Thomas and Leader of the opposition Arnhim Eustace were among lawmakers who expressed concern that the geothermal project being developed in St. Vincent and the Grenadines could expose the country to exploitation by the foreign investors.
In debating the Geothermal Resources Bill, Thomas said that there are no man-gods and government make mistake all the time.
He further said that big companies might set up the government without batting an eye, adding that profit is the primary concern of the private sector.
“And we have to go into any negotiation with these companies on the premise that they are here to make a profit,” he said.
Thomas, who is the ruling Unity Labour Party’s candidate for South Leeward in the next general elections, however, noted the need for public-private partnership, suggesting that there is no entity that would give the government the US$80 million to develop a geothermal power plant.
The power plant is being developed by Rekjavik Geothermal, an Icelandic firm, and Emera, both of which will own 75 per cent of the power plant, and the government will own the remainder.
“But I am a sceptic, Mr. Speaker, and believe that all of us should be sceptical until we are convinced and persuaded,” Thomas said.
He said that the fact that the United Nations, International Monetary Fund, World Bank and the Clinton Foundation endorses something, in his estimation, is not enough to lend blanket support.
“All of these institutions have been wrong before,” Thomas said.
He referenced the 2004 book “Confessions of an Economic Hit Man”, in which John Perkins details how big companies, the World Bank, and the IMF draw countries into “projects that will inevitably place them in a debt-trap”.
“I am not saying that is happening here. But I am saying we need to be mindful of these things and we need not take the world of some major corporation or some United Nations body or world institution simply because they did the study.
“We need to do the investigation because more often than not, sometimes some of these things benefit the foreign private company rather than the people.”
Thomas noted that the geothermal project would cost around EC$216 million, which is in addition to more than EC$100 million that the government has spent on the Lowmans Bay Power Plant, which was commissioned in 2011.
He said the EC$216 million geothermal power project is intended “to reduce the cost of energy to consumers, to stop the outflow of foreign exchange through the purchase of fuel, to ultimately provide energy security, to reduce pollution … And these are the things we need to pay attention to and see.
“One of the big offshoot, Mr. Speaker, of this geothermal energy production is that we may well develop a cheaper form of energy, and once we do that, it makes our country, not only will consumers pay less, but we make our country more competitive, thus attracting businesses, thus creating more job, and that is the high point, that is the prize we have to look at.
“These are the things that are going to benefit all Vincentians once we realize all of these things which we are projecting to see as a result of geothermal energy projection,” Thomas said.
Meanwhile, Leader of the Opposition Arnhim Eustace also noted that most of the US$80 million for the project will be foreign investment.
“This is going to be an entity which is essentially owned by the private sector,” Eustace said.
He asked that the proper safeguard be put in place, saying that if that is not done, the nation may find itself “at a point in time in this process when it becomes outside of our control.
“We will find ourselves dealing with persons who really control the funds that are available and when we have the energy to sell to our utility, they can determine those prices based on a rate of return that has to be agreed with those investors who are involved in the project.”
Eustace noted that lawmakers do not as yet know the rate of return that the foreign firms are expecting.
“… but we know that they have been spending their money and will spend more.
“And in our fiscal situation in our country, we have been operating on deficits for the longest while, we have very little contribution to make, unless we seek some sort of external funding, whether grant or loan.
“That is what makes their (foreign investors’) financial position powerful. We don’t have the resources, the financial resources to put of any significance at this time. So we’ll be looking to them. I don’t like that,” Eustace said.
But Prime Minister Ralph Gonsalves, in his response, noted that the bill says the owners of the plant shall pay royalties to the crown.
He added that the ownership of the plant is different from ownership of the geothermal resource.
“So I want the people to hear. We own Soufriere mountain; we own the resource. What we are doing, we are having a partnership with Reykjavik geothermal and Emera to build a geothermal power plant which will exploit the resource which we own.
“And when that company, which includes the government of St. Vincent and the Grenadines, Emera and Reykjavik Geothermal, that company will have a power purchase agreement with VINLEC. That is phase one of this project.”
He said phase two envisages exporting geothermal energy from SVG to St. Lucia and Barbados.
“And the letter of intent makes those things plain,” Gonsalves said, adding that the letter of intent is confidential, but that he has been lifting the “veil” on elements of it.