Consortium of investors can finance gas-to-shore project – analyst

…says Guyana’s future tied to affordable energy

The gas-to-shore project, an ambitious initiative that will see gas from the Liza field offshore Guyana being pumped onshore to generate power, can be financed by a consortium of investors to make the project a reality. This was the view of one financial analyst.

Financial Analyst Joel Bhagwandin

In an interview with this publication, Financial Analyst Joel Bhagwandin was asked about the project. With concerns in sections of society regarding the financing of the project, Bhagwandin noted that having a consortium of investors invest in the project is one of the financing options that should be explored.
“You ask me about financing options for the project… an example of an option that can be pursued is… the Government can hold a 15 or 20 per cent equity and then they can get a consortium of investors to invest in equity or stock or borrow from the capital market,” the analyst suggested.
The analyst acknowledged that there are a number of estimates appearing in sections of society, regarding how much the project would cost. While sceptical that the project would even cost $1 billion, Bhagwandin cautioned that it is still too early to pronounce on the estimated cost of the project, particularly as the Gas-to-Shore Task Force is still reviewing the project.
“Now there’s a lot of numbers out there. One time it was said there’s some feasibility study that says the project can cost $1.7 billion. What we know as of now is that the Government has set up a special task force to deal with the implementation and negotiation on this project.”
“So those details are still being worked out. They’re still evaluating the studies, perhaps conducting studies and they are still working with Exxon. So, if one must pronounce, you have to do it in a very pragmatic way.”
Bhagwandin also did comparisons of Guyana’s energy costs and Trinidad, to emphasise the importance of Guyana bringing down its costs. According to him, Guyana’s economic future and its low carbon future is tied to reducing its energy costs with natural gas.
“Let’s look at some comparisons. Trinidad and Tobago have been for a long time the regional powerhouse, in terms of being the most developed economy. They have the most advanced financial market. Their GDP (Gross Domestic Product) is four times our GDP, their per capita is four (times) our per capita income,” Bhagwandin said.
“In Guyana, the average cost for US cents per kilowatt is 25-30 cents per kilowatt of power. Trinidad is less than 10 cents. And Trinidad energy is more than 80 per cent driven by natural gas. They’re natural; gas driven. When we talk about environmentally friendly, when we talk about a low carbon strategy in a climate change world, natural gas is far greener than what we use right now to produce energy.”
The Government has set an ambitious timeline of 2023 to complete the transformative gas-to-shore project, the main objective of which is to transport sufficient gas from the Stabroek Block’s petroleum operations to supply some 200-250 megawatts of energy to the national grid, leading to a significant reduction in electricity costs.
The Government has identified the former Wales Sugar Estate, West Bank Demerara, as the site for establishing the power generation plant, a location that Bhagwandin said makes economic sense as it will open avenues for greater development.
The Government believes that the gas-to-shore project will transform Guyana’s economic landscape, bringing tremendous development for all. Additionally, the Government is also mulling building a Liquefied Petroleum Gas (LPG) plant at the site that will have the potential to cater to the energy needs of the people.
President Dr Irfaan Ali had previously said the landing of the gas-to-shore pipeline in Region Three would lead to “big industrial development taking place there that is linked to not only power generation and a power plant.” He also said the investment on the Demerara River’s shoreside would create massive opportunities and a trickle-down effect. (G3)