US$520M spent by Govt. on Gas-to-Energy project since 2022

Aug 19, 2024 News

…citizens, Parliament yet to see key documents for country’s most expensive investment

Kaieteur News – The Government of Guyana (GoG) has invested a whopping US$520M on the controversial Wales Gas-to-Energy project, since 2022.

Minister of Natural Resources, Vickram Bharrat

This information was provided by the Ministry of Natural Resources upon request by Kaieteur News.  According to the ministry, the government spent $24.813B in 2022 followed by $43.3B in 2023. This year, government in the National Budget has set aside another $40B of local funding for the project. This means a total of $108,113,000,000 or US$520M (using Bank of Guyana’s exchange rate of 208) from the National Treasury has been budgeted to date for the project.

The GoG had applied to the United States Export Import (US-EXIM) Bank for a US$646M loan to support the construction of the Natural Gas Liquids (NGL) plant and the 300-megawatt gas fired power plant, but the financing has not yet been approved.

Vice President, Bharrat Jagdeo had made it clear that the project would not be delayed by lack of funding from the US Bank. He explained in October last year, “If there is need for, we can have bridge financing until that (loan) comes on stream and from what I gather, the loan can fund retroactive expenditure so if you have bridge financing then you can go back and clear it easily once the loan comes on stream.”

Meanwhile, Minister of Natural Resources, Vickram Bharrat during his mid-year press conference last week indicated that the project is advancing. He noted, “Our application at the US EXIM Bank, I think we would have fulfilled almost all the requirements necessary and they have I think this month or next month the next quarterly meeting or something that our matter would go there so we are hoping that, from all indications that will be successful.”

In addition to the two plants to be financed by government while the loan application remains pending, there is also an additional price tag attached to the land acquisition by the state for the pipeline and transmission and distribution costs of the electricity.

ExxonMobil, the operator of the Stabroek Block is financing the pipeline aspect of the project, pegged at US$1B.  While the project has the potential to supply the nation with a cleaner, more reliable source of power, it has been subjected to criticisms, given its astronomical price tag, backed by no feasibility study.

Government has also been reluctant to release agreements signed with Exxon for the project. It was reported that since 2022, the government signed a Heads of Agreement (HOA) with the Stabroek Co-ventures, ExxonMobil, Hess and CNOOC, that outlines the principles and conditions for the commercial and technical arrangements of the deal.

Several attempts made by the Opposition in the National Assembly to access the agreements and key documents relative to the country’s single largest infrastructure project have been unsuccessful. In December 2022, Minister Bharrat told Parliament that the agreements could not be made public yet. He explained at that time, “There are other agreements on supply, buyer’s agreement, field development, licensing conditions, onshore works, and land matters that are currently being drafted. The respective agreements and policy documents will be presented to this Honourable House when they have been agreed upon and executed. All agreements are being done in a timely manner to meet the Final Investment Decision which will allow for the project to be completed by our committed deadline of December 2024.”

Following that commitment however, the public almost two years later is still awaiting the release of those agreements.

• agreements, budget, gas-to-energy, loan, spent