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US EXIM Bank loan for Wales Gas-to-Energy project still awaiting final approval- Winston Jordan
…says entire sum cannot be used retroactively
Kaieteur News- The US$660M loan applied for by the Government of Guyana to support the Wales Gas-to-Energy (GTE) project is still pending final approval, former Finance Minister, Winston Jordan has clarified.
While Vice President Bharrat Jagdeo had ann0unced, at his press conference two weeks ago, that the United States Export Import (US EXIM) Bank had approved Guyana’s application for the loan, Chairman of the Alliance For Change (AFC), David Patterson disputed this claim.
In fact, Patterson told the media that a reliable source at the lending institution had informed him that no such approval has been granted. While both Jagdeo and Patterson maintained their positions this past week at their respective press conferences, former Minister Jordan sought to add clarity to the situation during a live programme on Sunday.
During an interview on ‘The Countdown’ show, hosted by Andrew Weekes and Onix Duncan, Jordan explained the various stages associated with the loan approval. He was keen to note that Jagdeo, a former Minister of Finance, former governor and Guyana’s current representative at various lending institutions should be familiar with the process. As such, he said it was strange that such an announcement was made by the leader.
An artist’s impression of the Gas-to-Energy facilities to be constructed at Wales, with financing from the US EXIM Bank. (US EXIM Bank loan)
According Jordan, the penultimate stage is the loan approval committee. He said in Guyana’s case with the US EXIM Bank, the financial institution may have a similar committee which informed the state that it would only approve a portion of the funds requested.
Jagdeo did indicate that the loan would be approved to the tune of around US$500 million.
To this end, he said that Guyana’s loan application may have been approved to move on to the next stage. This next stage, according to him, appears to be notification to Congress, which will then determine the final decision- approval or rejection of the application. This decision will then be forwarded for consideration at the Board level.
“If Congress approves it then I believe it might be rubber stamp at the board level for approval,” the former Minister stated. Consequently, Jordan pointed out, “Until the full board meets and approve the loan to Guyana the loan has not been approved.”
He was keen to note that it is usual for the government to announce a loan approval by an international financial institution. In normal circumstances, he said, the Board would approve the application and an official statement would ensue. “It is on the basis of that release that the borrowing country would inform their press and their Cabinet so it’s rather unusual for Jagdeo to be saying that EXIM Bank has approved this when EXIM Bank itself never made any such announcement,” Jordan reasoned.
On the other hand, he said that while Jagdeo has repeatedly indicated that the loan would provide retroactive financing for the Wales project, the VP has not explained the limitations of this. As such, he pointed out, “Assuming that EXIM Bank does indeed (provide) retroactive financing, there are clear issues involved…one is that for you to get retroactive financing you have to follow the identical rules of the EXIM Bank. You can’t follow your rules, you have to follow the procurement rules of the EXIM Bank.”
Additionally, he explained that all the expenditure must comply with the Bank’s requirements for eligibility. “You have to keep a proper record of all the steps and so on and each stage of the way, you have to have approval by the EXIM Bank Procurement Committee that it is consistent with their rules and so on,” Jordan noted.
Moreover, he pointed out that there is a limit to the retroactive financing that will be provided by the institution.
The former Finance Minister explained, “The whole loan can’t go to retroactive financing, there is a limit to what retroactive financing you can get, so all of these things have not been made clear to the public but you get the impression that once they get this loan it can be applied retroactively to monies that we have already spent.”
(US EXIM Bank loan for Wales Gas-to-Energy project still awaiting final approval- Winston Jordan)
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