Latest update November 26th, 2024 1:00 AM
Amid ‘uncertainty’ over U.S. loan, Govt. plugs another US$400M into Wales gas project
An artist’s impression of the natural gas facility to be constructed at Wales
…construction of power plant to commence in second quarter
Kaieteur News – The Government of Guyana (GoG) has allocated $80 billion in this year’s trillion-dollar Budget for construction of a natural gas fired power plant and Natural Gas Liquids (NGL) facility at Wales, West Bank Demerara.
The allocation comes as the government enters a nine-month waiting period since it submitted an application to the United States Export Import (US-EXIM) Bank for a US$646 million loan for the two plants.
The plants form part of the Gas-to-Energy (GTE) project which also features a 12-inch 225 kilometers pipeline that connects to the two Floating Production Storage and Offloading vessels (FPSOs) in the Stabroek Block and ends at the Wales development site. This aspect of the project is being financed by ExxonMobil, the operator of the Stabroek Block.
According to the 2024 Budget Estimates presented to the National Assembly on January 15, the $80B or US$400 million provision will finance construction of the two gas plants, upgrading of the transmission network and project management consultancy and supervision of the GTE project. Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh on Monday revealed that construction of the 300 megawatt power plant is expected to commence in the second quarter of this year.
While the gas project is being touted as a “no-brainer” project aimed at slashing consumer electricity bills by 50 percent, there is no study that justifies the expenditure of US$2 billion on the project. The 2024 Budget Estimates pegs the total project cost of the venture at $192,583,102,000 or approximately US$963M. This does not include the US1B price tag attached to the pipeline component.
Last year the People’s Progressive Party (PPP) Government set aside $43.3 billion for the two power plants. In 2022 another $104B was allocated to the Wales gas project. Minister Singh on Monday described the project as “a major cornerstone for our nation’s economic growth and developmental path in the coming years”.
He reported that significant advancements have been recorded in the works required for setting up the integrated plants and the Material Offloading Facility. In fact, he said that the construction of a heavy-haul road was completed and is now in use to support the project. He said, “Onshore pipeline installation and first offshore pipeline installation activities which began in 2023 will continue this year to support start-up of the integrated power plant by December 2024.”
Only yesterday Kaieteur News reported that International Lawyer, Melinda Janki wrote to the United States Export Import (US-EXIM) Bank urging the financial institution to “respect the rule of law in Guyana” and withhold funding for the gas plants to be built at Wales, West Bank Demerara.
Janki on behalf of public interest litigants Elizabeth Deane-Hughes and Vanda Radzik wrote to the Bank on January 12, 2024. In the letter addressed to President and Chair of the Board of Directors, Reta Jo Lewis, the Lawyer pointed out that Guyana’s High Court on October 5, 2023 concluded that “…the decision by the EPA to grant the permit to Esso Guyana was contrary to law and was improper.”
Consequently, Janki said, “Eximbank should not provide funding for any project which is based on a decision (the grant of a permit) that is ‘contrary to law’. Eximbank should respect the rule of law in Guyana.” It must be note that this is the second letter that has been issued to the US-EXIM Bank regarding the loan pending approval. Deane-Hughes in a letter dated April 22, 2023 to the US-EXIM Bank flagged a number of discrepancies in the project, requesting that the loan being sought by the government to fund the initiative be blocked.
Read more here: https://www.kaieteurnewsonline.com/2023/05/17/guyanese-woman-writes-us-bank-to-block-loan-for-wales-gas-project/
- allocation, budget, gas, loan, project
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Dear Editor I’m amazed at all the hullabaloo over this project loan. WHY borrow when you can finance without a loan. This is the problem with this story. The government has Enough Money çoming in to finance without borrowing. The lawyer has done they government a Great favor. I hope Exim US takes her advice. The government is doing the right thing in putting the oil money into this project. When it is completed without the loan it will save the government money on the interest rate they would have to repay. SO thanks MS Janki for your intervention you have just saved the Guyanese people some money 💰.