15 November 2009

FRETILIN Media Release: Gusmao forced to scrap heavy fuel power plan



Dili, 11 November 2009

Gusmao forced to scrap heavy fuel power plan

In a serious admission of policy failure, the Gusmao government has been forced to cancel its environmentally-ruinous decision to import old, de-commissioned heavy fuel electricity generators from China as the centrepiece of its national electrification plan.

In a vaguely worded letter to MPs, dated 4 November, delivered to the parliament on 5 November, but only distributed to MPs on 9 November, the de facto prime minister Xanana Gusmao announced that "jointly with the consultants, we see the need to make an immediate correction to the whole electrification plan for the country and consequently make a correction to the respective contract for the 'Construction of the Power Stations'."

The letter conceded that "the involvement of a consultancy firm in this process of the Construction of the Power Stations should have been considered much earlier" - a measure FRETILIN called for even before the government announced the contract with the China Nuclear International 22nd Company (CNI22).

FRETILIN's parliamentary leader Mr Aniceto Guterres MP today described Mr. Gusmao's letter as "a grave admission by the de facto prime minister that his government has failed to prepare a transparent, detailed, workable and sustainable plan to electrify the country."

Mr Guterres warned that the government appeared to be repeating its original mistake of relying on fossil fuel without taking into account the medium and long-term prospects of utilizing renewable energy sources, such as wind, solar and hydro.

"We are pleased to have received the letter, because FRETILIN has provided the most forceful opposition possible in parliament against this ill conceived, unsustainable and environmentally disastrous proposal to buy outdated equipment under a secret contract with the Chinese company.

"However the government clearly has not learnt any lessons from their ill-fated heavy fuel adventure. Once again the de facto Prime Minister puts forward very vague aspirations to acquire 'new generators' capable of operating on gas and other refined fuels as well as heavy oil.

"Mr Gusmao also is apparently planning an increase in capacity beyond Timor-Leste's forecast needs up to 250 megawatts, without any costings and no mention of technical or economic feasibility studies. This is typical of Mr Gusmao's total lack of transparency."

Mr Guterres said FRETILIN would hold the government accountable for financial losses suffered by the cancellation of the heavy fuel deal.

"As much as US$10 million has already been paid under the original contract, on our reckoning," he said. "This equates to almost the total of US$11 million budget for the Ministry of Natural Resources, Minerals and Energy in 2006, which had responsibility for the power sector, when petroleum revenues had not yet begun to come in."

"The government arrogantly dismissed advice about the technical, legal and environmental shortcomings of the now-abandoned plan to use heavy fuel generators," he said. "Opponents of this foolish plan were treated with rudeness, condescension and ridicule, including by the de facto Prime Minister himself during budget debates in parliament."

Mr Guterres repeated FRETILIN's demand for the government to make public the contract and procurement documents for the deal with CNI22, as well as the contract with the Italian consultancy firm, Elc-Bonifica Joint Venture (EB-JV), which was hired by the government to analyse and advise on the contract with CNI22.

Mr Guterres said the Gusmao government would fail to meet its promise to deliver 24 hour electricity to all thirteen districts by end of 2009.

"The last two years of huge budgets for the power sector have been wasted. The Gusmao regime ignored upgrading the current generating capacity to keep up with supply, chasing 'Xanana's dream' of a quick fix before the next election.

"Power supply even to the capital Dili is being cut off for up to four or more hours per day. The only residents not affected are those served by the VIP feeder that delivers electricity to the embassies and residences of government ministers and other dignitaries."

For further information please contact Jose Teixeira MP on +670 728 7080

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