ExxonM’s pipeline cost not in Guyana’s debt profile

Sep 18, 2024 News

Former Finance Minister questions final cost of pipeline;

-repayment terms

-cost to maintain pipeline

-source of funds to repay debt

-who owns pipeline

-whether repayments have commenced

Kaieteur News – Former Minister of Finance, Winston Jordan is of the firm view that a fiasco, 10 times grander than the US$200M Skeldon project, is playing out before the eyes of Guyanese with the Gas-to-Energy (GTE) initiative, which carries a price tag of about US$2B.

Former Finance Minister, Winston Jordan

In a recent public broadcast, the former minister and Member of Parliament (MP) pointed out that the cost of the project is constantly ballooning even as a single agreement pertaining to the project is still to be laid in the National Assembly.

The government said that the pipeline was expected to cost Guyana an estimated US$1B, but the project developer, ExxonMobil Guyana Limited (EMGL) never announced a Final Investment Decision (FID) casting further doubt on the price of the infrastructure.

As documents for the project remain sealed to the bosom of the Irfaan Ali-led administration, Jordan argued, “There is no agreement that has been put in Parliament about the laying of this pipeline much less the whole project.” In addition to the 12-inch diameter pipeline being laid by ExxonMobil to transport gas from the Liza Fields in the Stabroek Block to the Wales Development Zone, West Bank Demerara, the government of Guyana is undertaking a 300 megawatt power plant and a Natural Gas Liquids (NGL) facility.

The former minister in raising concerns over the project said last week the Vice President, Bharrat Jagdeo during a press conference informed the nation that Exxon would not have advanced the money for the project if the company did not believe it was profitable. To this end, Jordan explained, “So Exxon has advanced us the money which is a loan. If this is a loan, why doesn’t it appear in the debt profile of the country?”

He added, “How much is the loan? Do we know how much is the loan? We don’t know. What are the terms of this loan, we don’t know. We have not seen an agreement for this loan. Who owns the pipeline?”

Jordan also pointed out that there is also a cost attached to maintaining the pipeline which the nation is still unaware of.

The former minister was keen to note that the External Loans Act requires the government to table all loan agreements that have been concluded as soon as possible thereafter. He however argued that the agreement with Exxon is so long overdue to the extent that the company is now preparing to complete the project and pump nitrogen into the structure to preserve it until it is operational. Moreover, he noted that arrangements have been made to repay the company for the pipeline.

Exxon previously said it expects the pipeline to be completed by the end of 2024. While another section of the media reported that President of Exxon Guyana, Alistair Routledge said that repayment will commence only after the project starts up, auditors who examined the company’s 2018-2020 expenditure observed that costs for the pipeline were added to the cost bank.

As details on the financing arrangements of the project remain unclear, Jordan has called for the agreements with Exxon to be made public. “Why isn’t this debt in our debt profile, where is the agreement? Why hasn’t this been carried to the Parliament? Have they started back repayment, where is the repayment coming from,” Jordan questioned.

He continued, “How can we be paying back when we haven’t seen any agreement, how can you pay back when this debt doesn’t appear in our profile and how can you be paying back from our future share (of revenue) when the Natural Resource Fund Act forbids this and what is going to be the accounting arrangements?”

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cost, Debt, fiasco, gas, GTE, profile

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