Govt. borrows to fund small renewable energy projects

Feb 12, 2022 News

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…but takes ‘oil money’ to build gas plant at Wales
…ExxonMobil to be repaid for pipeline with crude from Stabroek Block

Kaieteur News – The People’s Progressive Party/Civic (PPP/C) Government has committed to transitioning towards a greener economy utilising renewable energy such as solar and hydropower, and to move away from the use of fossil fuels such as hydrocarbon powered electricity generation plants.
In pursuing this agenda, however, the government has resorted to borrowing hundreds of millions of dollars from a number of bilateral partners and international financial institutions to fund a number of small hydropower projects in some hinterland areas.
This is in addition to a number of other small projects such as small wind and solar farms to be constructed as part of the administration’s Energy Diversification Matrix.
Oil revenues however, 100 percent of which is being put towards budgetary support for the 2022 biggest budget ever – $552.9B – will be going towards the construction of a 250 megawatt hydrocarbon fired gas plant at Wales, West Bank Demerara.
This year’s Budget has some $20.8B set aside to commence that project and is being funded, at least based on government’s commitment to the Wales Development Zone, directly from central government.
As such, it would mean that government is borrowing hundreds of millions of dollars to pursue small renewable energy projects that will benefit a negligible proportion of the Guyanese population, while the nation’s oil resources is being pumped into a project swamped in controversy over its feasibility. A project that will see ExxonMobil Guyana selling Guyana its own natural gas—hydrocarbons extracted from the Stabroek Block—through a third party.
The information was laid bare for Members of the National Assembly over the course of the budgetary allocations, at least for those that would have paid attention to the Budget contributions to the House both during the debates and Committee of Supply stages of the process.
The Energy portfolio for the administration comes under the auspices of the Office of the Prime Minister, Mark Phillips, who in his presentations to the National Assembly confirmed that the administration was not only forging ahead with the gas-to-shore project but also with renewable initiatives.
A perusal of the Power Generation Capital allocations totalling some $24.4B would show however, that with US$20.8B coming directly from government a good chunk of the remainder of that amount is in fact loans.
There is, for example, a $1.6B allocation provided for the continuation of an Energy Matrix Diversification Programme.
It has as its total price tag $4.4B with government putting $916.3M thus far with an additional equal amount, coming from the Inter American Development Bank (IDB). The total $1.6B this year however, is coming from the IDB.

Under that project profile, the programme accounts for the installation of mini-grid systems in Bartica, Mahdia and Lethem, the upgrading of the Sophia Substation, rehabilitation of transmission lines and institutional strengthening and capacity building.
There is allocated in Budget 2022, some $469.2M for the pursuit of a Renewable Energy Improvement—Power System Project.
That money is being provided by the Japanese, and according to the Budget document, the total amount projected for the initiative is some $3.2B. Prior to this year, $2.6B had already been spent under this programme head and, according to the project profile, it will account for the installation of photovoltaic and energy management systems for the CARICOM Secretariat.
This is in addition to “enhancing sub-stations, equipment and distribution lines at Canefield, Onverwagt, Good Hope and Sophia.”
According to the Budget document, the benefits of that foreign funded project include improved transmission and distribution capabilities and “increased use of clean energy alternatives.”
Additionally, there is a $300M allocation in the Budget this year for the development of small hydro projects. That money, according to the government document, will be coming from the Islamic Development Bank (IsDB).
The details for this project as provided in the Budget document outlines the construction of hydropower facilities at Moco Moco and Kumu.
That allocation will also, according to the document, go towards funding geotechnical and topographical surveys, environmental and social management plans, consultancy services and land acquisition.
The benefits of this foreign funded government programme, which is estimated to cost a total of $3.1B, are expected to be “increased use of clean energy alternatives” and “improved power generation”.
With regard the pursuit of solar power projects, there is a $172M allocation for this year, again foreign funded. This time coming from India.
Under that loan—estimated to cost in total $2.1B—it is documented that this “project entails provision for solar systems for households in hinterland communities” with its benefits being, “improved generation of electricity”.
The gas-to-shore project, for which government has advertised and received Expressions of Interests, the joint development of the Wales Development Zone is allocated $20.8B, for which government’s portion will be coming 100 percent from the coffers.
This means that government has resorted to borrowing for its renewable energy projects and upgrades to its transmission and distribution system, while it takes the nation’s oil earnings to pursue a gas fired power plant among other initiatives.
It would be apposite to note that as ExxonMobil forges ahead with the pipeline aspect of the project, that too will eventually be paid for by Guyana through, ‘cost oil’ according to the Substantive Minister, Vickram Bharrat.
He gave the confirmation during the second day of the consideration of the Estimates of Expenditure when he responded to his Shadow Counterpart, MP for the Alliance for Change, David Patterson saying that he knows that the gas-to-shore project is not ‘in the pipeline’ but rather is already in its implementation stage.
To this end, he told the House that Patterson was fully aware that the “pipeline” aspect of the project, which is being pursued independently by Esso Exploration and Production Guyana Limited (EEPGL)—Exxon Mobil Guyana— “is being funded from cost oil under production sharing agreement (PSA).”

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