Pres. Ali tells Al Jazeera oil money supporting solar projects, but records show programmes being funded by loans

Jan 05, 2023 News

Kaieteur News – President Irfaan Ali, in a recent interview with Al Jazeera News said that government is using its oil revenues to invest in solar projects and other renewable options to help reduce the cost of electricity in the country, but records show that the government under his stewardship in fact has borrowed billions to fund such ventures.

The Head-of-State told the Al Jazeera journalist: “We are investing in solar, hydro, wind and natural gas as part of our energy mix.”

The Middle East news agency also spoke with the Chief Executive Officer (CEO) of the Guyana Energy Agency (GEA), Dr. Mahendar Sharma who shared one of the solar initiatives being pursued by the administration. He pointed out that presently government is rolling out a programme that will provide some 30,000 solar home systems to distant communities off the national grid.

This project however is not being funded by the government or the nation’s oil wealth but through financing with a line of credit from the Government of India. That loan was signed in September 2021 to the tune of US$7.2 million. Even though government claimed that the nation’s oil wealth is being put towards solar projects, this was not the only loan taken by the administration to pursue such initiatives.

In October last year, this newspaper reported that the government signed an agreement with a private local firm to supply 686 kilowatt peak (kWp) electricity equivalent to 0.686 Megawatt (MW) of solar power to benefit the residents of Mahdia, Region Eight.

This newspaper understands that the contract has been awarded to Standby Power Engineering Company (SPECOM) to the tune of $362,411,200. Notably, the solar project is being funded by the Inter-American Development Bank through the Energy Matrix Diversification and Strengthening of the Department of Energy (EMISDE) programme.

President Irfaan Ali during the interview with Al Jazeera Journalist

In December another contract was signed, this time to facilitate a mini hydro project at Kumu, through a loan from the Islamic Development Bank (IsDB). The contract was signed on November 22 last to the tune of US$12.85 million between the Guyana Energy Agency (GEA) and Vidullanka PLC, a Sri Lankan firm to build a new 1.5 megawatt (MW) hydropower project at Kumu, Region Nine. As part of its scope of works, the Sri Lankan firm will also rehabilitate and upgrade the defunct Moco Moco hydropower plant to some 0.7MW capacity.

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 green projects in some hinterland areas.

Oil revenue; however, in the 2022 Budget were directed to the controversial 300 Megawatt power plant at Wales, West Bank Demerara. During the Budget presentation last year, Prime Minister, Mark Phillips, who is responsible for the energy sector 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 however, was being streamlined from the IDB last year. 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.”

With regard the pursuit of solar power projects, there is a $172M allocated in the 2022 Budget, 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.