Gas-to-energy project could be another ‘Ponzi Scheme’ – Glenn Lall

Sep 11, 2022 News

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…reminds citizens of secretive, Marriott Hotel, Berbice Bridge deals  

Kaieteur News – As the Irfaan Ali Government pushes ahead with the much vaunted gas-to-energy projected, which it said will cut electricity charges by 50 percent and bring healthy returns to the treasury, businessman, Glenn Lall has warned that the venture could be another ‘Ponzi Scheme’ – the likes of the Marriott Hotel and the Berbice River Bridge deals that are mired in secrecy.

The gas-to-energy project will encompass three major aspects – the pipeline to transport the gas to Wales, West Bank Demerara, the NGL facility that will treat and separate the gas and the power plant to generate the electricity. This publication had reported that Guyanese have been told that the pipeline aspect, which is being pursued by US oil major ExxonMobil’s subsidiary—Esso Exploration and Production Guyana Limited (EEPGL), will cost around US$1.3 billion. Even this is expected to increase when Exxon closes critical contracts for same. The main opposition and several industry stakeholders have urged the government to conduct a new feasibility study for the project and also insist, the nation should first see the contract for the venture before government signs on.

“There is no way that you should be spending hundreds of millions of US-dollars without the appropriate feasibility studies and without an updated analysis based on the changes that have occurred. If this project is going to cost nearly twice as much, I believe it is pretty clear that we need to have the appropriate studies to justify the spending,” Economist Elson Low, a member of the APNU+AFC, said. Leader of the Opposition, Aubrey Norton also has warned that the People’s Progressive Party (PPP) must not be allowed to enter into an agreement with oil giant, ExxonMobil, for the gas-to-energy project without the nation first seeing an updated feasibility study and the deal to which the country will be accepting. Norton believes that if the administration is true to its mantra of “transparency and accountability” then it would ensure that the relevant documents are made public. Norton reasoned, “Remember the Government is managing the resources of the people. The Government doesn’t own any resource. The Government doesn’t have total authority over what happens. The Government is elected by the people to manage the state which belongs to the people and therefore the Government should be accountable to the people and I see no reason why they should not make it public so that we can claim some form of good governance.”

Secrecy  

Meanwhile, weighing in on the issue, Lall, the publisher of the Kaieteur News and an advocate for a better oil deal, said that the government must be stopped in its track with this project. “Just a reminder, the gas-to-shore (-energy) project, if we don’t see the contract, we could end up just like the Marriott Hotel and the Berbice Bridge. Bharrat Jagdeo, Ashni Singh and Winston Brassington – the three of them designed that contract in which they designed that deal and installed private people secretly. You would believe that the PPP come out of office, the Coalition was in there and they could not find out or know who those secret people in the Marriott Hotel were that were milking the money, whether the hotel made a profit or not. It’s almost the same thing they did with the Berbice Bridge – the couple private people they installed, including Jagdeo best friend who owns the single largest block of shares in the bridge, were guaranteed payments regardless whether the bridge makes money or lose money.  Them boys pocket secure, they can never lose with such a sweet deal. So if we are not careful and demand to see this gas-to-shore project before it is finalised by Jagdeo and Brassington, we won’t be back in the same boat as the Berbice Bridge and Marriott, we would be on a huge barge sailing to hell,” Lall said.

He insisted that Guyana’s external debt is already over US$3B, yet the government is forging ahead with the project which will add another US$2B to the debt stock. “Could you believe that all Guyana debt is presently US$3B and we can’t pay, but we are going to add US$2B more to that US$3B on the gas-to-shore project with a few private people inside?”

Lall argued that to date, President Ali, Vice President Bharrat Jagdeo, Finance Minister Dr.  Ashni Singh and Winston Brassington have not told the nation “or show us how this project will benefit Guyana or if it will ever benefit the Guyanese people.” Lall added, “We must all stand up to ensure that this deal is not signed in secret and has confidentiality clauses that keep us out of the loop and in the dark from knowing what is it we are giving away and what we are getting. We must know the ins and outs, the pros and cons. After all, that US$2B gas plant and pipeline investment is money that will be coming out every day from your oil, shortening your pocket while fattening the pockets of private people.”

Supporting Norton’s call for an updated feasibility study for the project, Lall mentioned that the Coalition Government had done one when the price was US$700M. He said today the price has jumped to more than double, almost US$2B. “Isn’t it time this nation sees whether this project is going to make money for us man…Yes it is time and I agree with Aubrey Norton on this one for sure,” Lall said. This newspaper reported last week that back in 2018, the Inter-American Development Bank (IDB) had partnered with the State to conduct a feasibility study of the planned natural gas pipeline. The primary objective of the study, which was executed by Energy Narrative for US$70,000—an international entity that provides strategic market analyses and advice was to determine the overall feasibility of transporting natural gas from offshore Guyana, building a Natural Gas Liquids (NGL) separation plant and a Liquefied Petroleum Gas (LPG) production plant to market the liquids from the natural gas stream, as well as building a new electricity generation station to use the remaining dry natural gas. (See link for report: https://nre.gov.gy/wp-content/uploads/2021/04/Feasibility-Study-for-Guyanas-Offshore-Natural-Gas-Pipeline.pdf)

Notably, a table was used in that report that was sourced from ExxonMobil, in which the oil company said the pipeline would cost US$478 million. Four years later, Exxon now estimates that the structure could cost Guyana US$1.3 billion. In its Environmental Impact Assessment (EIA) for the project which was submitted in April of this year, Exxon explained it has not yet made a Final Investment Decision (FID) on the project, and is continuing to evaluate cost considerations during the project development process. But for the time being, it said the current project cost estimate is approximately US$1.3 billion, warning too, “a higher certainty cost estimate will be developed after receiving and negotiating all major contracts.”

Jagdeo at a recent news conference explained that the Government is currently doing estimates for the Natural Gas Liquids (NGL) Plant and the power plant to generate some 300 megawatts of electricity for the country. These two facilities, he said, can cost Guyana an additional US$700 million. The pipeline aspect of the project will be funded through cost oil, which is recoverable by ExxonMobil. However, the NGL and the power plant will be funded by the state, which Guyanese will fund through their monthly electricity bills over a 20-year period. VP Jagdeo has estimated that five US cents per kilowatt hour may be the cost to generate the electricity, while another five cents may be lost in the transmission and distribution of the power, which could take the final price for the sale of the electricity to about US$15 cents, after adding five US cents as profits for the company. This, he assured, will reduce the cost of electricity for consumers by 50 percent.

Trickster   

But Mr. Lall told his audience when Jagdeo speaks, he has considerable difficulty believing him.

“I don’t know, because nothing is clean and clear in anything this man says or does. One minute Jagdeo saying, ExxonMobil will be taking out the pipeline costs from the oil, so Guyana doesn’t invest any money; then he says Guyana will be paying a few cents for the gas and how he is working with them to bring down the price. Is con somebody going to get con there, then you hear the gas is free now. One story he and ExxonMobil and everybody stick with is electricity costs will cut in half, how that will happen they are not telling us, they are not showing us, there is no figure for that, presently he says we paying 60 dollar a megawatt, and that going to cut in half to 30 dollar.”

Mr. Lall said what in effect Jagdeo has said is that electricity can be produced for half.  “You know what that means, somebody is set to draw down…”

Explaining further, Mr. Lall gave an example: “If a man has been supplying you mangoes at $20 for one, and he suddenly tells you he is going to cut the price by half to $10 for a mango, you will be happy– but he ain’t telling you that the mango price drops so low that you can buy the same mango for $5 instead of $10.”  Mr. Lall said ExxonMobil has sold Ali and Jagdeo a story about reduced electricity charges, which they in turn have been trying to sell the citizens.

 

 

 

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