Suriname now owns Afobaka hydroelectric dam

PARAMARIBO--Suriname has secured ownership of the Afobaka Dam, the hydroelectric facility in District Brokopondo that provides current for electricity company EBS.
 
At the stroke of midnight on December 31, 2019, the facility was officially transferred from departing aluminium multinational Alcoa to state oil company Staatsolie. The latter will from now on operate the dam and deliver electricity to EBS.
 
“The dam was transferred to Suriname in optimal condition,” Finance Minister Gilmore Hoefdraad announced at a press conference on Wednesday. He reported that Suriname was able to secure ownership of the dam by paying off its outstanding electricity bills to Alcoa. “We deposited US $111 million on Alcoa’s bank account.”
 
This effectively clears the path for Alcoa to fully close up shop in Suriname. The Pittsburgh, Ohio-based company ran its subsidiary Suralco in Suriname for over 100 years, with its Paranam bauxite refinery once accounting for 72 per cent of the country’s estimated export earnings of US $496.6 million. In the 1960s, Suralco built the Afobaka Dam to produce hydroelectric energy, which created the 1,560-square-kilometre W.J. van Blommestein Reservoir, one of the largest artificial lakes in the world. The dam has provided much of the country’s electricity, with the government paying Suralco a price tied to the cost of oil.
 
Then, in 2014 Suralco started winding down its operations, because of “restricted bauxite supply and negative world market scenarios.” The company closed its doors on November 30, 2015. In August last year, Suriname’s National Assembly approved the terms for the company’s departure; the Afobaka Dam and its subsidiary Suralco would be given over to the government of Suriname at the end of the year.
 
But in December news reports unveiled that Suriname still owed around US $120 million for the electricity that it had received but not paid for over several years. One condition of the departure deal was that Suriname would pay off its debt to Alcoa.
 
To pay off the debt, government issued a US $125 million bond through global investment firm Oppenheimer & Co. Hoefdraad reported that the loan has a four-year term, with the first payment expected in June 2020.
 
Hoefdraad was joined at the press conference by Vice President Ashwin Adhin, Minister Sergio Akiemboto (Natural Resources), Staatsolie Chief Executive Officer (CEO) Rudolf Elias and businessman Dilip Sardjoe, who led the committee that negotiated with Alcoa about the terms of its pull-out.
 
The officials reported that the loan would save Suriname close to US $60 million annually. Staatsolie will provide current at a lower rate to EBS, which means that people will not see a rise in their electricity bills.
 
The take-over of the dam comes as Suriname is readying itself for the May 2020 general elections, which made securing the dam a matter of national prestige for President Desi Bouterse. The President will be running for a third term despite his 20-year sentence for the December Murders.
 
The 12-year trial against the former military leader and 24 defendants in the December 8, 1982, murders of 15 of his opponents, came to an abrupt end on Friday, November 29. There had subsequently been speculations that the president’s conviction would make it difficult “to get attractive financing. What may happen is that we end up with a junk bond” with extremely high interest rates, said Viren Ajodhia, a Surinamese energy sector consultant.
 
Government’s efforts to secure the loan to pay off the debt to Alcoa had prompted heated debates in Parliament and ignited public protests spurred on by opposition parties, who warn that government is borrowing too much and saddling future generations with more unpayable debt. “Everybody in Suriname knows that the loan policies of this government are getting out of hand. In 2010 the national debt was 3.3 billion Surinamese dollars (SRD) but today it’s SRD 20.4 billion, which translates to roughly SRD 40,000 per resident,” the VHP opposition party said in a statement. (SRD 1 is approximately US $0.13).
 
There has been no statement yet from the opposition about the take-over of the dam.

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