Govt. to approach US-EXIM Bank to fund Gas-to-Energy project - Jagdeo

Govt. to approach US-EXIM Bank to fund Gas-to-Energy project – Jagdeo

Dec 31, 2022 News

Kaieteur News – The Government of Guyana will be seeking a loan from the United States (US) Export Import (EXIM) Bank, to fund the controversial Wales Gas-to-Energy (GTE) project.

The revelation was made by Vice President, Bharrat Jagdeo during his most recent Press Conference at the Office of the President.

Jagdeo explained that while Government has already set aside over $20 billion in this year’s budget, additional funding will be sought from the U.S financial Institution.

Vice President, Bharrat Jagdeo

The Wales gas project will encompass three major aspects, that is, the pipeline to transport the gas to Wales, a Natural Gas Liquids (NGL) facility that will treat and separate the gas, and a power plant to generate some 300 Megawatts of electricity.

Notably, so far, Guyanese have been told that the pipeline aspect, which is being pursued by US oil major ExxonMobil, will cost around US$1.3 billion, while the other two phases would cost US$759 million.

According to the VP, “The cost oil part is the pipeline and that is, we are sharing that between Exxon and the Government of Guyana- the NGL facility and the power plant those will belong to the Government of Guyana.”

This means that more money will be deducted from the country’s oil earnings to pay Exxon back for developing the pipeline. The interest rate and number of years this would take the country is still unknown.

Meanwhile, as it regards funding for the Government’s aspect of the project, Jagdeo explained, “In this year’s budget there is money, I think there is over $20 billion for the first payment and then we are trying to structure this maybe through a loan. We will be approaching EXIM Bank-US.”

In July, President Irfaan Ali signed a Memorandum of Understanding with US EXIM Bank for US$2B, targeting potential funding for infrastructure, renewable energy, and other areas.

According to an Office of the President Press Release, the MoU represents an important milestone in US-Guyana relations since it lays the foundation for Guyana to access EXIM financing and facilities for the first time and provides for interventions at a scale that is likely to have a lasting developmental impact.

Despite there was no recent study done to confirm the viability of the natural gas project, Jagdeo is adamant that it remains feasible. In arguing his case, he pointed out, “We will get all the power and then we will get all the liquids- 100 percent of the liquids would belong to us. There is no 50/50 split there because we own that so we get 100 percent of the cooking gas, etcetera, which is about three times more than what we use nationally so we would have to export and there will be other liquids too, not just cooking gas.”

On December 13, Government signed a US$759M contract with CH4-Lindsayca to build the power plant and NGL facility at Wales.

CH4-Lindsayca was among five companies who had placed bids for the projects in September. The American joint venture had placed the highest of five international bids to the tune of US$898M to build the plants. However, Jagdeo at his last Press Conference indicated that the project cost has been reduced to US$759M.

Similarly, Exxon has commenced awarding contracts for the construction of the pipeline. Back in July, it was reported that Subsea 7 and Van Oord, two international companies, were awarded a contract to lay the 190 kilometres pipeline.

It was only on November 25 that the oil company received the blessings of the Environmental Protection Agency (EPA) to commence the project.

So far the agency has not announced a decision on the NGL and power plant aspects.

The Environmental Protection (EP) Act is clear at Section 21(1) that “No person shall- (a) construct, alter, extend or replace any plant, structure, equipment, apparatus, mechanism, or thing that may discharge or from which may be discharged a contaminant into any part of the natural environment except under and in accordance with a construction permit issued by the Agency…”

This therefore means that even Government is required to seek an environmental permit from the EPA before it rolls out any developmental project that can affect the environment.