Update On HPGS Hydrogen Plant and Next Steps25-10-2021
HPSG appreciates that there have been mixed experiences with past initiatives and projects in Suriname. HPSG shares the vision with that of the current government of initiating investments in a sound and transparent matter with mutual benefits. Second, HPSG reads about different opinions on the level of power production and hence again states that the wind, solar and hydrogen energy sources will be complementary with a stable 100MW output to the national grid.
With respect to financial guarantees offered by the government of Suriname for loans associated with the investment, HPSG would like to stress that the guarantees received from the Government are limited to the offtake of the energy. This only applies once the plant is established and operational. The guarantee is connected to the Power Purchase Agreement for the offtake of 100 MW electricity at a price of USD 11 cents per kWh and without this Power Purchase Agreement there is no viability for the project. HPSG likes to reiterate that the responsibility for the financing and construction of the plant remains the responsibility of HPSG.
With respect to the pricing, the fixed pricing of USD 11 cents per kWh should be seen as an advantage, considering volatility of fossil fuels. The USD 11 cents is necessary for the bankability of the project and will not be indexed during this 25-year period. It is not fair to compare this price to a Suriname blend rate, nor with the Afobaka price alone. In addition, we stress that the current heavy fuel oil (HFO) electricity production, which accounts for a substantial share in Suriname’s national electricity consumption, comes at a significantly higher cost than this 11 cents per kWh. Furthermore, Suriname electricity prices are subsidized and not representative to the international standards.
HPSG noted that ten days after signing the Agreement with the Government of Suriname, the international credit ratings of Suriname were reduced to almost default levels. This obviously had consequences for investors interested in the country, and accordingly, the bankability of our project. At this time, HPSG is negotiating the international backing of a financial institution. The downgrade of Suriname’s credit ratings after the signing of the Agreement has not discouraged HPSG in securing finance for the project and realizing it timely and in accordance with the agreements made with the Suriname Government. HPSG remains open to all communication with the media, amongst others to further clarify all aspects of this project.