Home Letters Gas-to-energy project – Naysayers’ innuendos and misinformation cannot stop it
Dear Editor,
Let us be clear: the gas-to-shore project is of critical importance to the development trajectory that has established Guyana as a tsunami of development, and that is set to keep Guyana at the top of the global GDP growth for several years to come. It is also a project that will keep Guyana at the top of countries responding in a meaningful way to stop climate change.
Besides the gas-to-shore project being among the biggest investment projects in Guyana’s and Caricom’s history, the gas-to-shore project will lead to cheaper, cleaner energy for our country. Prices for household and business energy needs will drop dramatically and be among the lowest electricity costs in Caricom, and Guyana will keep its carbon footprint on the positive credit side.
Indeed, energy cost in Guyana will almost instantly be cut to half of the present cost, and will eventually drop far below the 50% mark. For ordinary households, this will increase their spending power, since the savings will help them to spend on other items. For businesses, the cost of production and doing business will be reduced, creating an opportunity for greater profits. The positive economic consequences will be enormous. The naysayers and anti-PPP critics cannot stop this milestone project.
The project has two components. First, there is the gas line from the drilling sites to the shore. In this case, the gas line will be from the oil production sources to Wales. This part of the project is being financed entirely by EXXON, and Guyana will pay back this cost over a twenty-year period. The estimated cost is about US$1B. Second, the power plant that will use the gas to produce energy and even for export will be constructed at the Government’s cost. The power plant is being financed through the Government. The estimated cost is about US$759M. Regardless of where the finances come from, the entire gas-to-shore project – including the pipeline, the power plant, and the gas that flows through the pipeline – is owned by Guyana, and all the profits belong to Guyana.
All of this appears simple enough to understand. None of this information has been secret, and President Irfaan Ali and VP Bharrat Jagdeo have many times reiterated the information. Yet, the facts have been misrepresented over and over again by the Opposition and by charlatans who are determined to derail the development.
Budget 2023 made clear that the Government is funding the design and construction of the power plant at Wales. In fact, the Government, through an international bidding process, has given a contract to an American conglomerate to design and construct the plant at Wales at an estimated cost of greater than US$750M. The evaluation of the international bids came down to a shortlist, with a Chinese company at a lower cost. However, the American firm was assessed as having more experience. The evaluation of the bids and the recommendation for whom to award the contract to were done through a European firm, together with a Canadian company that the Government hired, given that Government itself has limited experience.
Throughout the process, the Guyanese people have been kept informed. Yet, the Opposition and their sycophants, like Glenn Lall, insist on misrepresenting the facts and misinforming the nation. EXXON has no ownership, and will not be benefitting from the power plant. What is difficult to understand in all of this is beyond reasonable people to fathom. We cannot accept that the Opposition and their sycophants are so dumb that they cannot understand any of this. Their misrepresentation therefore can only be seen from the perspective of a reckless disinformation campaign.
As for the gas-to-shore pipeline, this part of the project is being completed by EXXON itself, with their responsibility to source financing. This will therefore not be a loan on the books of the Government of Guyana. This does not mean that the pipeline will be owned by EXXON; it will be owned by Guyana. However, Guyana has been able to brilliantly avoid taking a direct loan. The Government has agreed that EXXON will build the pipeline similar to a BOOT arrangement, whereby Guyana will repay the cost of the US$1B over a period of about 20 years by paying an amount equivalent to the gas piped through the pipeline.
This will be approximately US$55M annually for 50 million cubic feet of gas per day, or about 20B cubic feet of gas annually. Even if we look at it as buying the gas, it comes to about US$3M for one billion cubic feet of gas, which is about ten times lower than what we can buy gas for. Make no mistake, Guyana owns the pipeline, and it is Guyana’s gas; there is no “sale” of gas by EXXON to Guyana. EXXON makes no profit, since Guyana is only paying back the cost of the pipeline design and construction. In twenty years, Guyana will have no more payments, and this monetary obligation becomes an income for Guyana. All profits from funding cheaper electricity, from benefitting from carbon assets, and from exporting gas come to Guyana; none go to EXXON.
These facts seem so simple to understand that ordinary citizens cannot fathom why the charlatans are so confused. There are two distinct components in this project, but the charlatans insist on conflating the two components and speaking of them interchangeably. The PNC sycophants have accused Vice President Bharrat Jagdeo of lying when he said that EXXON is financing the pipeline construction, and their evidence is that Budget 2023 speaks of the allocation of funds to pay for the US$759M contract awarded to the American company. The American company, however, is being paid US$759M for the design and construction of the power plant, not the design and construction of the pipeline.
They further accused the VP of lying when he said that it is EXXON that is sourcing the fund for the construction of the pipeline. The Government is not placing any loan in its books for the pipeline; EXXON is putting that loan in its books. The Government is never going to borrow a cent for the pipeline. Payments will be made once gas comes through the line, based on the amount of gas produced for a period of twenty years. The payment will essentially be savings on fossil fuel that would be reduced.
Respectfully,
Dr Leslie Ramsammy