The Upper Mazaruni hydro-electric project

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The project idea

During the 1973 election campaign, Prime Minister Forbes Burnham announced that his administration intended to develop a large hydro-electric power complex in the Upper Mazaruni River region aimed at powering an aluminium smelter to be built at Linden. At that time, Guyana was spending more than 25 percent of its Gross Domestic Product on fuel imports costing about $500 million.

Immediately after the massively rigged election, Burnham set about to fulfil this campaign promise. In 1974, he sought the assistance of United Nations Development Programme (UNDP) which provided a grant to enable a major hydro-electric survey in the country. The UNDP appointed the World Bank as the executing agency and the Montreal Engineering Company was contracted as the consulting firm. The survey included a hydro resource reconnaissance and inventory for all of Guyana, and pre-feasibility studies of a limited number of sites.

Through this survey, it was established that Guyana's total hydro-electric potential amounted to about 7,000MW spread over a number of sites, some of which were inaccessible. The Upper Mazaruni River basin, close to the border with Venezuela, with a capacity of 3000MW was identified as most suitable for development, and a full-scale feasibility study of the area was carried out in 1975.

Around the same time, the Government began to inform the Akawaio Amerindian population in the Upper Mazaruni area of the plan for the construction of the dam and the creation of a reservoir for the hydro-electric project. In March 1975, the captains of the seven Akawaio villages in the area were hurriedly called to Georgetown to meet with the Minister of Energy and Natural Resources, Hubert Jack. But due to the suddenness of the request, two of the captains could not attend. At the meeting, Jack informed the others that the villages in the locality would be flooded as part of the reservoir and that the government wanted their cooperation in the resettlement of the 4,000 residents of their communities. However, he provided no information as to where they would be resettled. When the chiefs raised objections to this plan, Jack told them that the decision to flood their villages was final and could not be changed. He also tried to convince them that the hydro project would give the Amerindians of the area an opportunity to contribute to the development of Guyana.

According to a report of the meeting carried in London's The Guardian on March 21 1975, one of the captains opposed the scheme while the other four present were induced to sign a statement agreeing to the drowning of their villages. The paper stated that the captain who refused to sign was told that he would be barred from the resettlement committee that would be established.

Feasibility studies

Early in 1976, the Government established the Upper Mazaruni Development Authority to administer the installation of the Upper Mazaruni Hydro-Electric Project and the aluminium smelter at Linden.

Later that year, the Government contracted the large Swiss company, Alusuisse, to undertake a feasibility study for the construction of the modern primary aluminium smelter at Linden. At the same time, Sweco, a Swedish consulting group, was contracted with World Bank assistance to conduct a feasibility study for the establishment of the Upper Mazaruni Diversion Scheme, including the building of the dam across the river.

Both studies, completed during 1977, formed the basis for discussion between representatives of the Government of Guyana and multilateral financing agencies including the World Bank. These studies established the technical feasibility of the project with a first phase installed capacity ranging from 750MW to 1200 MW and a smelter with a capacity ranging from 140,000 to 280,000 metric tonnes of aluminium per year.

Such a smelter plant required in excess of 300MW thus providing a base load for electricity development by the hydro-electric scheme which was expected to provide the national grid with about 240MW.

The plan

The overall plan for the development of the hydro power project involved the construction of a dam at Sand Landing on the Upper Mazaruni River which would create a 500 square kilometres reservoir, largely for regulation of flow rather than height of head. The flooded area was not expected to form a large lake but a much smaller body of water extending into fingers of existing river tributaries, widened when flooded to higher levels.

Also to be constructed was a headrace tunnel about 11 kilometres long through rock to a 4,200 metre drop in elevation leading to an underground powerhouse with accommodation for turbine generators capable of producing 750 to 1200 MW of electricity. The plan also involved running a 400kv double-circuit transmission line, about 370 kilometres long from the powerhouse to Linden where it would enter the national grid. Also to be built was a main access road with an all-weather laterite surface, 320 kilometres in length, from Itaballi, near the mouth of the Mazaruni River, to the dam site. This road was needed to transport construction materials to the site of the hydro-electricity dam and power plant.

This ambitious scheme was expected to provide primary employment for more than 6,000 persons. A new town consisting of 320 apartments was to be built at Kumarau in the Mazaruni to serve personnel operating the installation. This town would also have offices, a guest house, vocational training facilities, a school, shopping centre, church, medical clinic and recreational facilities.

Opposition from the Akawaios

With regard to the flooding resulting from the creation of the reservoir, and the displacement of approximately 4,000 persons, mainly Akawaios, the Minister of Energy in January 1976 set up a resettlement committee to work out compensation terms and proposals for the smooth transition of resettlement. The committee also had the task to explain to the local residents the rationale and the main features of the power project.

It was apparent that the local Akawaio population was very perturbed over the plan to resettle them. A few international groups championing the cause of indigenous peoples took up their concerns and gave them much publicity in the international media. One of these groups was the London based Survivor International (with offices in New York) which rendered advice to the Akawaio population as to how they should publicise their concerns and even opposition to the project.

Thus, Survivor International warned that despite existing evidence that even minor changes can seriously affect the cultural life of the Akawaios, the Government planners did not take into account the "cultural appropriateness" of new housing for the resettled population.

The resettlement concerns were also raised in early 1977 by the captains of the Akawaio villages when they wrote to the Prime Minister, Forbes Burnham:

"This land is where we belong. It is God's gift to us and has made us as we are. This land is where we are at home, we know its way: and the things that happen here are known and remembered, so that the stories the old people told are still alive here. This land is needed for those who come after us. . . . This land is the place where we know where to find all that it provides for us - food for hunting and fishing, and farms, building and tool materials, medicines. Also the spirits around us know us and are friendly and helpful. This land keeps us together within its mountains - we come to understand that we are not just a few people or separate villages, but one people belonging to a homeland. If we had to move we would be lost to those who remain in other villages. This would be a sadness to us all, like the sadness of death. Those who moved would be strangers to the people and spirits and places where they are made to go."

In response to this opposition, the government tried as much as possible to allay the fears of the local residents by explaining the economic benefits that would become available to them with the construction of the hydro-electric project.

Venezuela informed

By the end of 1977, the blue-print for the huge multi-billion dollar hydro-electric project was ready. The drawings and two copies of the feasibility studies done by Sweco were forwarded to the Venezuelan Government which, according to the Guyana Government, did not object to the establishment of the project in that area, even though a part of Venezuelan territory was expected to be flooded on the completion of the scheme. The Guyana Government anticipated, too, that Venezuela would purchase excess energy generated by the hydro-electric turbines.

The Government also submitted an application to the World Bank for financing the project. In the meantime, it had begun to implement the scheme and by 1978 more than US$25 was already spent from its own resources for starting the construction of the access road.

During the visit of Venezuela's President Carlos Andrez Perez in October 1978 to Guyana, the project was fully discussed. At his press conference on 20 October 1978 at the end of his visit, Perez expressed Venezuela's general support for the project by declaring:

"Venezuela has decided to study the possibility of linking the present and future systems of the two countries and purchasing electricity from Guyana on the completion of the hydro-project. . . We will give all we can to help develop this complex."

But according to a report published on 2 April 1981 in the London Guardian, while Perez was ready to offer Venezuelan financial help to the hydro-power scheme, his advisers talked him out of it at the last moment. It also claimed that the Venezuelan Government was on the point of reaching a border settlement with Guyana by which Venezuela would have renounced its claim to the Essequibo region in return for some territorial concessions. The report added that this proposal was rejected by Guyana. Subsequently, the Guyana Government denied that there were any discussions on reaching any border compromise.

Venezuela's opposition to the project

Shortly after the inauguration of Venezuelan President Luis Herrera Campins in 1979, Guyana's Minister of Energy and Mines, Hubert Jack, informed Venezuela's Foreign Minister Dr. José Alberto Velasco Zambrano in March 1979 of the progress of the project. The latter's response was that the Venezuelan Government needed time to study it.

The hydro-power project almost immediately after began to experience problems in obtaining international financial backing. Political groups in Venezuela, associated with the new Herrera Campins administration, began to oppose the establishment of the project in the area which they maintained was Venezuelan territory; and, no doubt, these objections caused international lending agencies to be hesitant in financing the project.

According to the monthly Caribbean Contact of December 1980, Jack had claimed the previous month that foreign organisations were seeking to influence the World Bank to cancel aid for the project. He said that one such organisation was the Survival International whose objective was to preserve the natural way of life of the indigenous Akawaio Amerindians who would be displaced on the implementation of the hydro-electric scheme. The paper also mentioned that "the Venezuelans were accused by Guyana of economic blackmail against that country."

With respect to the activities of Survival International, the New York Times on 18 October 1980 in an editorial on "Twilight of the Primitive" praised the organisation for highlighting the cause of the indigenous peoples. The editorial also observed that the proposed project in the Mazaruni region would involve the construction of a dam on the frontier with Venezuela, and that it "would flood the home of the Akawaio, an unoffending tribe known for its cultural vitality. . . . But since the dam would involve Guyanese pre-emption of a border area that is also claimed by Venezuela, the project may not materialize. . ."

Up to the end of 1980 the project had not commenced because of the non-availability of international funding. While Guyana was awaiting a decision from the World Bank on its funding application, the Caribbean Contact of April 1981 wrote that Brazil was offering political support for the construction of the Mazaruni hydro dam, thus giving recognition of Guyana's sovereignty over Essequibo.

Burnham, now President of Guyana, visited Venezuela at the beginning of April 1981 and the issue of Venezuela's cooperation in the implementation of the project was discussed. But events took a dramatic turn on the night of the 4 April 1981, when the Venezuelan Government issued a communiqué stating that because of "Venezuela's claim on the Essequibo territory" it "asserted the rejection of Venezuela to the hydro-electric project of the upper Mazaruni." The communiqué also announced that Venezuela had no intention to renew the Protocol of Port of Spain which in 1970 had placed the border issue in abeyance for an initial period of 12 years.

Burnham was very surprised by this Venezuelan action. At a press conference on 8 April 1981, he stated that it was the first time Venezuela was expressing opposition to the Upper Mazaruni Hydro-Electric Project. He said the discussions in Venezuela were generally frank, cordial and open and "we sought to examine how economic and other forms of cooperation could be carried forward especially on the question of the Upper Mazaruni Hydro-Electric Project."

Responding to questions from reporters, Burnham said that he was not worried about obtaining international financing for the project, and added that the Guyana Government was in active discussions with would-be donors to ensure its success. He also emphasised that the project in no way violated the Protocol of Port of Spain.

Replying to a question on joint development, he said that Guyana never sought to ask Venezuela to assist in joint development of the hydro-electric project. He explained that the cooperation that was sought was in relation to the purchase by Venezuela of the excess power from the project.

Border tensions escalated

The Venezuelan communiqué and Burnham's counter-statements obviously heated up the tensions between Guyana and Venezuela. In Caracas, the Venezuelan Foreign Affairs Minister, in re-asserting his country's claim to Guyana's Essequibo territory, stated on 10 April 1981: " In the specific case of the Upper Mazaruni Dam project, it should be made evident on the international level, that its construction, under the present conditions is unacceptable for Venezuela."

In Guyana, opposition political parties strongly criticised Burnham on his Government's handling of the hydro-electric scheme. On 11 April 1981, the Working People's Alliance stated:

"In his many admissions of April 8, under the pressure of his diplomatic failure, Mr. Burnham revealed that the Upper Mazaruni hydro-electric scheme had been planned on the assumption that Venezuela would import the excess output of the scheme. He had no contractual arrangements for this sale of electricity and Venezuela has now opposed the project as a whole. It is hard to see how such an astute politician could have based an important project on such flimsy assumptions. His continuing optimism about being able to finance the project appears misplaced, since financiers will want to know how the electrical output will be traded commercially in order to make the controversial project viable."

Apparently trying to apply some damage control, Burnham arranged meetings between himself and leaders of the two opposition parties in Parliament to discuss the deteriorating state of affairs. On 13 April 1981 he met with the leader of the United Force, Marcellus Fielden-Singh, and with Dr. Cheddi Jagan, leader of the People's Progressive Party (PPP), two days after. At these meetings, Burnham gave them the background about the steps taken by the Government to obtain financial support for the project.

But the PPP, while being sceptical about the project, was also concerned over the heating up of the border tensions and the deteriorating relations with Venezuela. On 23 April 1981, the Party stated:

"The Guyanese people must be alert against the use by the PNC of the border issue to muster political support in the face of isolation at home and abroad, and to provide an excuse for its failure to implement the Mazaruni hydro-electric smelter project, mooted on the eve of the 1973 general election, and on which tens of millions of dollars have already been expended."

Burnham used his May Day speech the following week at the National Park to thousands of workers to explain the objective of the hydro-electric project. To facilitate its development, he explained that the Government was working on arrangements with the Amerindians, who were living in the area expected to be flooded after the building of the dam, on how they would be involved in the project. He added that the Amerindians would also decide where they would want to resettle.

On the resettlement issue, Dennis Abraham, an Akawaio Amerindian residing in the upper Mazaruni area, in a letter published in the Mirror on the 3 May 1981, asked the Government to name the area set aside for the resettling of the Akawaios, and claimed that no information had been provided to them. He concluded:

"Now that the Upper Mazaruni Hydro-Project is linked with border disputes and territorial claims, it has caused fear of danger to the Amerindian people, particularly the Akawaios who are settled within Upper Mazaruni. It is clear that the present Government is preparing to create refugees out of 4,000 Akawaio Amerindian people from the Upper Mazaruni region."

Dr. Jagan also castigated the Burnham regime for what he regarded as the mishandling of the relations with Venezuela. At a public meeting on 9 May 1981 in Georgetown, he declared:

"The PNC now wants everybody to beat their breasts and rally in support of its regime, but patriotism is the last refuge of scoundrels. They also want to use the border issue to cover up their failures in the Upper Mazaruni Hydro Project. They have no conception of planning."

Meanwhile, the Guyana Government launched a diplomatic offensive by sending Ministers and diplomats to brief Caricom governments on the Venezuelan claim to Guyana's territory and the objections raised by Venezuela to the hydro-electric project.

The Caribbean Contact of May 1981, in a commentary, pointed to the aggressive campaign of Venezuela, and asserted that the Campins administration had already publicly warned Brazil against any cooperation with Guyana in rendering assistance in the economic development of any part of Essequibo, "clearly having in mind the forestalling of the billion-dollar hydro-power project for which the Burnham Government is still to find the necessary development capital."

Venezuela's letter to the World Bank

Venezuelan hostility to the hydro-electric project moved significantly one step further on 8 June 1981 when the Foreign Minister, José Alberto Zambrano Velasco, wrote a letter to the President of the World Bank giving the multilateral institution an ultimatum to refrain from financing the Upper Mazaruni Hydro-Electric Project. While saying that Venezuela had never recognised the arbitral award of 1899, the letter further re-asserted Venezuela's claim to Guyana's territory, and alleged that "the objective pursued by Guyana with its Upper Mazaruni project was political". It also revealed that the Venezuelan Government would recognise "no right nor legal situation which may be involved in the future by third states, international bodies or private corporations" based on the exercise of Guyana's sovereignty over the territory claimed by Venezuela.

The letter also attacked the World Bank insisting that it was not within the Bank's "competence" to "prejudge or adopt a position on border controversies". It reaffirmed Venezuela's position of opposition to any transaction between Guyana and the World Bank involving finance of the hydro-electric scheme. In any case, Venezuela argued, the feasibility of the project depended on the purchase of electricity by Venezuela, something which the Venezuelan Government did not intend to do. The letter added:

"The construction of the dam over the Upper Mazaruni encompasses considerable works which would alter deeply and irreversibly the region and the physical milieu. Venezuela ratifies its firm opposition to have such a unilateral action of disposition taken in a territory over which it has sovereignty. . . . The opposition of Venezuela is so much firmer as it is quite clear that the political purpose pursued by Guyana with the Upper Mazaruni Project, the priority of which is far from proven and with an economic feasibility, in the denied assumption that it were ever built, which would depend on the acquisition of electric power by Venezuela, and this would never happen under any circumstance. . . ."

Soon after, newspaper reports indicated that the Venezuelan Government had instructed its senior functionaries in the World Bank and the Inter-American Development Bank to oppose Guyana's applications for funds for projects such as the Upper Mazaruni Hydro-Electric Project. In response to these reports, Carl Greenidge, the economic adviser to President Burnham - according to a report in the Guyana Chronicle of 21 June 1981 - pointed out that the importance of Venezuelan influence should not be over-rated and that its threat to pursue economic aggression against Guyana by opposing the international financing of projects in the Essequibo was not likely to have more than nuisance value. He was firm on the belief that the reported intention of Venezuela would have no effect on either future applications from or disbursements of loans to Guyana from the international banks.

The matter of Venezuela's economic aggression was regarded with grave concern within Caricom. On the 23 June 1981, Caricom delegations attending a meeting of the World Bank in Washington issued a joint statement on this economic aggression against Guyana and deplored Venezuela's most recent attempt to prevent World Bank financing for the hydro-electric project.

This support was followed by a statement issued by Caricom Foreign Ministers who met in Grenada on 30 June-1 July 1981. The Ministers declared that Caricom states could not accept that any state had the right to action to frustrate the economic development of any other state, and expressed full support for Guyana's effort to develop hydro-power in the Upper Mazaruni.

Guyana's letter to the World Bank

The Venezuela letter to the World Bank was sharply attacked on 19 September 1981 when Desmond Hoyte, Guyana's Vice-President for Economic Planning and Finance, wrote a lengthy letter to the President of the institution, A.W. Clausen. Hoyte's letter rejected Venezuela's claim to Guyana's territory, and added:

"It is not within the competence of the Government of Venezuela to decide on or dictate the development priorities of Guyana; nor has the Government of Guyana found any provision in the Bank's charter that requires the Bank to satisfy the Government of Venezuela about the development priorities of a member country before it participates in a project in that country. Moreover, it is manifest absurdity for the Government of Venezuela to suggest that the Bank would become involved in the financing of a project without first establishing its feasibility. Further on this point, I would merely add that the Venezuelan Foreign Minister is under a misconception when he asserts that the feasibility of the project depends on the purchase of electricity by Venezuela. This statement is completely divorced from fact. The project has been independently assessed by the World Bank, among others, as being technically and economically feasible, in circumstances which do not involve or require Venezuelan participation in any shape or form. . . . In the circumstances, the Government of Guyana interprets the communication of the 8th June, 1981, as an undisguised attempt by the Venezuelan Government to manipulate the Bank and use it as an instrument for achieving its ulterior political ends."

Suspension of the project

With Venezuela maintaining its opposition to any World Bank financing, further work on the project was suspended and hundreds of workers were laid off. In a scathing attack on Venezuela, Burnham, in a speech on 23 February 1982 to mark Guyana's republic anniversary, referred to the Venezuelan Government's "attempt to block the World Bank's sponsorship of our hydro-power project; the pontifical statement that the hydro-power project is neither suitable for, or in the interest of Guyana; her lobbying of international agencies against investment in, or sponsorship, of projects in western Essequibo; protest to nations and corporations involved or to be involved in economic ventures along with the Government of Guyana in the area; a general campaign of economic aggression; interference in the internal affairs of Guyana. . . ."

Venezuela's objection to the hydro-electric project and its continuing claim to Guyana's Essequibo territory apparently had an effect on its application to join the Non-Aligned Movement (NAM) to which Guyana, as a long standing member, raised opposition. At a meeting of the NAM Bureau in New York on the 15 February 1983, Venezuela deferred its application for full membership for the time being as Guyana had not indicated its willingness to withdraw its opposition to it. Subsequently, the Venezuelan Foreign Minister wrote a letter to the Permanent Representative of Cuba to the UN - the Chairman of the Bureau -accusing Guyana of exercising "a sort of veto" to keep out Venezuela from the NAM, and also claiming that Guyana had not received any support from the Movement on the border issue.

Commenting on Venezuela's withdrawal of its application, Burnham in his Republic Day address on the 23 February 1983 pointed out that Guyana had no veto in the NAM, as Venezuela wanted others to believe. Explaining the position, he declared:

"We merely tried to have Venezuela declare her adherence to certain principles of the Movement, namely, non-use of force in the furtherance or support of territorial claims, the employment of peaceful means in settling disputes and abjuring economic aggression and, therefore, the withdrawal of the objection to our Upper Mazaruni complex lodged with the President of the World Bank. . . The Venezuelan Government must know why the application was really suspended. The reason given publicly is obviously spurious. . ."

The Guyana Foreign Ministry on the 26 February 1983 also rejected Venezuela's "several false and scurrilous accusations" contained in the letter, and stated that these were part and parcel of the ill-conceived propaganda techniques of the Venezuelan Government. Venezuela's claim that Guyana received no support from the Movement was dismissed as "arrant nonsense".

Burnham expressed similar sentiments two months later on May Day 1982 when he addressed a rally at the National Park in Georgetown.

By 1984, the Guyana Government, after spending over a billion Guyana dollars on various aspects of the project, including employment costs, and failing to acquire international financing, eventually decided not to proceed any longer with it. As a result, the plan for the aluminium smelter was also shelved.

3 December 2006