Govt. already discussing contingent financing for Wales gas plants - Jagdeo

Govt. already discussing contingent financing for Wales gas plants – Jagdeo

Feb 03, 2024 ExxonMobil, News, Oil & Gas

…as U.S. Govt. holds off on approvals for new LNG export projects

Kaieteur News – Though the Guyana government is still hopeful for an approval of a US$646 million loan from the United States Export Import (US EXIM) Bank to support the Gas-to-Energy (GTE) project, the administration is already discussing a contingent line of credit.

Vice President, Bharrat Jagdeo

This was revealed by Vice President, Bharrat Jagdeo on Thursday during his weekly press engagement at Freedom House, Robb Street, Georgetown.

His comments come on the heels of a move by the United States government to pause approvals for pending and future applications to export liquefied natural gas (LNG) from new projects.

The Vice President (VP) in response to a question from this newspaper explained that the U.S. withheld approval for 17 LNG projects that were being developed for export; however Guyana’s loan application is to fund a domestic project for local consumption.

Jagdeo explained, “They didn’t give permission for 17 projects that were building out a capacity to export LNG…in our case, our gas production, which is the gas to energy project, it is not for export, it is to supplant our supply which is a bunker seed diesel supply mainly, which is very polluting so the mere fact that we are investing in a power plant that would use gas now, we can cut our emissions from the same output…”

He reiterated that the project has garnered the support of U.S. members of Congress and government is still confident in the approval of the loan. Be that as it may, he indicated that the country is discussing alternate options to finance the initiative.

“We anticipate that this loan would be approved and strongly so, but we always have options, and so the project shall be completed,” the former Head of State noted, as he responded to another question on whether he believes environmental activists in the U.S. could affect Guyana’s chance of accessing the loan and moreover, who the country would then turn to for financing.

The VP was keen to note that government has to fulfill its promise to the citizens of Guyana for cheaper electricity. To this end, he pointed out, “They’re the bosses, not environmental activists from around the world or some who are paid here to stop these development projects.”

He reasoned that if the democrats lose the elections in the U.S. then the restrictions on new LNG projects for exports could very well be lifted.

Meanwhile, when asked about the alternative options available to government to finance the gas plants, the VP explained, “I don’t want to speculate about the alternatives to EXIM Bank funding because we anticipate that the funding will be available and as I said before, it will be retroactive funding, however without disclosing sources, we have already been talking about a contingent line of credit that could easily supplant that and secondly from the budget.”

The government official said the administration has already financed more than the first US$100 million through budgetary allocations. “We have been making payments to the company from the Budget so those are two potential sources- own revenue from the Budget and from a contingent line of credit that we are already discussing,” he said.

Since April 2023, it was reported that government applied to the US EXIM Bank to fund the Natural Gas Liquid (NGL) facility and 300-megawatt power plant to be constructed at Wales, West Bank Demerara.

The other aspect of the GTE project, a pipeline to transport the gas to the site, is being financed by the operator of the Stabroek Block, ExxonMobil Guyana Limited (EMGL).

While the loan approval may be facing pushback from environmentalists abroad, Guyanese too have been pushing for the Bank to deny the government’s loan application.

Only last month, Kaieteur News reported that International Lawyer, Melinda Janki wrote to the financial institution, urging it to “respect the rule of law in Guyana” and withhold funding for the gas plants.

It must be noted that this was the second letter that has been issued to the Bank regarding the loan pending approval. Elizabeth 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.

financing, gas, GTE, Jagdeo, loan, options

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