Gas to energy: a rigmarole, red flag or real deal

Jan 16, 2024 Editorial

Kaieteur News – The Wales Gas-to-Energy project (GTE) is running into some choppy conditions. Financing is languishing, a Final Investment Decision (FID) is not forthcoming, a credible financial feasibility is so far not part of the wheeling and dealing, and activists are keeping up the pressures brought to bear on the project. To date, the GTE project seems to be part mystery and part of the usual Bharrat Jagdeo brand of magic. The question that Guyanese who will be paying for this expensive project is simple: is the Wales GTE project the real deal, or is it yet another red flag and rigmarole, compliments of Vice President Jagdeo?

Every Guyanese that we know would be delighted to have a 50% reduction in their electricity bill, and a reliable supply of energy. Vice President Jagdeo has promised both from the inception, and he isn’t budging. The concern in many corners is how did he come up with the 50% reduction in the price of electricity from this project. It has three components: a pipeline part, a Natural Gas Liquid (NGL) plant, and a 300-megawatt power plant. The pipeline component costs US$1 billion, and is already being laid by ExxonMobil, notwithstanding the fact that some other aspects of the project remain unresolved.

As mentioned earlier, there is no financial or other feasibility study completed for this GTE project. For some reason, the US Export Import Bank (EXIM) has been dragging its feet for over a year on an application by Guyana for a loan of US$646 million for this project. This is surprising, when there is consideration of the friendly relations that exist between Guyana and the US, and that the Americans have been pushing for more business for its companies here. Also, it is no secret that the US is not too pleased with the presence of China in many sectors of Guyana’s economy, and the cozy relationship between some senior government officials and the Chinese. When all of this is weighed, and the US$646 million loan is still to be approved over a year later, it is only reasonable to wonder what is going on. The Americans want to do more business in Guyana, yet this loan is hanging for an eternity, it seems. Could the absence of a credible feasible study (financial and otherwise) have something to do with the delay? US EXIM operates in the conservative mold traditional to bankers, so it is not going to lend over a half billion American dollars on the mere representations of a powerful political figure.

Not to be deterred, Bharrat Jagdeo, the man laboring uphill with this GTE project, had a New Year’s surprise for the media in his January 11^th press conference. The Wales GTE is being financed for the time being by the Guyana treasury. According to Jagdeo, the belief is that the loan will be approved by EXIM via “retroactive financing.” He, however, was clever enough to cover all three stumps in his wicket by saying that if EXIM didn’t approve the US$646 million loan that the government has lined up “alternatives.” We interpret that to mean that the ever-ready Chinese are waiting patiently in the wings to be called to run to the rescue with stopgap financing (bailout) for the project. We do not think that the Americans would be too thrilled with such a development.

As matters stand, this is more than a fine kettle of fish, for the waters around this Wales GTE project are rather muddied. Because there is still the FID (Final Investment Decision) to be made by ExxonMobil. This US oil behemoth has not been one to manifest sloth with any project in Guyana. In fact, the opposite has been the reality with ExxonMobil galloping from one project to another with energy and unchecked enthusiasm. The absence of a supporting FID also is a bit of a stunner, and again the issue is whether missing feasibility studies (proper ones) have something to do with where things are in ExxonMobil land. The activists are not letting up, and the project is falling back. Since so many elements are up in the air, we revisit that question about the GTE project: rigamarole, red flag, or real deal?

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Editorial, financing, red flag, rigmarole, Wales Gas-to-Energy project (GTE)

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