Prove gas will supply cheaper electricity than solar or halt Gas-to-Energy Project – Int’l Lawyer challenges Govt.

Apr 28, 2024 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

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Kaieteur News – A damning international report released since October 2023 cited solar as a cheaper alternative to the US$1.8B Gas-to-Energy (GTE) however, the Government of Guyana (GoG) is yet to provide any evidence to refute these findings and is instead pushing ahead with the controversial project.

Award winning international Lawyer, Melinda Janki in a recent letter to the United States Export Import (US-EXIM) Bank flagged government’s failure to publish coherent and convincing financial analysis to support the business case for the project.

In her April 25, 2024, letter to the President of the US-EXIM Bank, Reta Jo Lewis, Janki indicated that the financial institution might wish to obtain this information before further considering the government’s loan application.

It was reported in April 2023 that the GoG applied to the US-EXIM Bank for a US$646M loan to fund a natural gas-fired power plant and natural gas liquids plant to be constructed by contractor CH4-Lindsayca. The plants, to be constructed at Wales, West Bank Demerara are part of the GTE project, which also includes a pipeline being built by ExxonMobil Guyana Limited to transport the gas from offshore to the site.

The US-EXIM Bank has not yet approved Guyana’s application for the loan and is said to be in the concluding phase of its independent analysis of the project.

Janki said on Saturday that publicly available information on this project indicates that it could cost US$1.9B. She was keen to point out this estimate could increase as big infrastructure projects are notable for exceeding budget.

“The cost of this Project will be borne by the Guyanese public because the government will have to take money from the public purse or use public assets such as oil in order to pay Exxon Mobil Guyana and the other contractors. Similarly, any loan from Eximbank will have to be paid back from public money,” the Lawyer reasoned.

To this end, she explained that the people of Guyana are therefore entitled to see that the proposed gas project is financially viable before the government seeks to borrow money to proceed.

She argued, “It is not sufficient for the government to make promises. Economic development is not a matter of wishful thinking. Economic development requires robust economic analysis of the global energy market. The proposed project will lock Guyana into gas at a time when the fossil fuel industry is in decline and is likely to leave Guyana with stranded assets and an adverse impact on Guyana’s economy.”

The renowned international Lawyer pointed out that economic development requires robust financial analysis of the arrangements for the proposed project and sound management of power sector. According to Janki, “The government’s performance in the power sector today is exemplified by blackouts and the ludicrous arrangement in which GPL has to pay a Qatari company for a Turkish owned ship which is apparently registered in Liberia to burn oil which GPL has to purchase and supply.  Why lease a ship that is said to be capable of providing 450MW of power? Why not do as former President Sam Hinds did and get a generator?”

The Lawyer pointed out that the global energy think-tank Institute for Energy Economics and Financial Analysis (IEEFA) concluded that, “For less than the cost of the Gas to Energy project, solar energy can reach every Guyanese household. It will cost less to taxpayers, lower the cost of electricity to ratepayers, hire more Guyanese workers from local businesses ….”

She was keen to note that Guyana’s development and the prosperity and wellbeing of Guyana’s citizens depend upon cheap, safe reliable renewable energy providing indigenous jobs and stimulating indigenous economic growth.

Consequently, the Lawyer argued, “Why has the government failed to provide any evidence to rebut IEEFA’s conclusion? Why does the government intend to burden Guyanese taxpayers with unnecessary debt? Why should Guyanese pay higher rates for electricity from gas instead of lower rates for electricity from solar power? Why should Guyanese workers lose out on the jobs that a solar power industry would provide? Where is the sense in locating this Project in an area that is likely to be under water to supply people whose homes and businesses are projected to be under water by 2030?”

Janki added, “Perhaps, the government has good solid answers to these questions but if so they must provide those answers. If not, the government should halt this Project.”

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• GTE, Janki, loan, Solar, US-EXIM

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