Latest update November 13th, 2024 1:00 AM
Guyana applies to US to borrow GYD$134B for Gas-to-Energy project
Kaieteur News – Guyana has officially applied to The Export–Import Bank of the United States (US EXIM Bank) for a significant loan to fund the Gas-to-Energy project. Budget documents indicate the government is seeking GY$134 billion (US$646 million) for the project, raising concerns about the country’s debt record. The magnitude of the funds requested from the US Bank could significantly affect Guyana’s financial stability.
Vice President Bharrat Jagdeo announced that the application for the loan has been submitted and is progressing towards a conclusion.
He said, “The Minister of Finance [Dr. Ashni Singh] has had several engagements with EXIM Bank, and we from what he said, it’s making progress toward the conclusion of the loan. So, progress is being made in that regard.”
The money is supposed to go toward the tremendous US$759 million cost of the natural gas-fired power plant and natural gas liquids plant to be constructed by contractor CH4-Lindsayca. The plants, to be set up at Wales, are part of a larger project that includes the upgrade of the transmission network and the cost of consultants. The project’s total cost, according to the budget 2023, is estimated to be US$955.5 million.
President Irfaan Ali signed a Memorandum of Understanding (MOU) last year with the EXIM Bank-US for potential funding of US$2 billion for development projects. The President aims to involve the US government and private sector more in Guyana’s affairs.
The International Monetary Fund’s (IMF) most recent World Economic Review report, released in April 2023, labelled Guyana among five countries in the Latin America and Caribbean (LAC) Region as heavily indebted poor countries (HIPC). The proposed loan from the US Bank, if approved, will add to the growing levels of debt in the country, making it more challenging to manage.
Construction on the Gas-to-Energy project is set to begin this year, with CH4-Lindsayca handling the natural gas-fired power plant and natural gas liquids plant, and the ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), handling the pipeline. The pipeline alone is expected to cost more than US$1 billion. Guyana will also have to find money to pay Exxon back for this investment.
However, the Environmental Assessment Board will have to make a decision on the appeals against the Environmental Protection Agency’s (EPA) decision not to require a separate environmental impact assessment for the power plant. So major construction cannot begin until this is settled.
Jagdeo said he did not want to comment on the matter until the decision is handed down. A meeting was hosted at the Cara Lodge in Georgetown in March. However, there are concerns about whether it was fair, due to a triple conflict of interest involving three senior government officials appointed to the board.
The government also has to finalise several permitting documents, including the Liza Phase One field development plan. Jagdeo said the Liza project is built with a 20-year lifespan, and insinuated that the government will have to grant an extension to accommodate the Gas-to-Energy project.
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