Home News GtE funding: “No fatal flaws” from independent assessments done by US EXIM...
The Guyana Government is confident that the United States Export-Import (EXIM) Bank will approve the US$646 million loan to fund its highly-touted Gas-to-Energy (GtE) Project, stating that nothing has been found that would be fatal to the initiative.
Earlier this month, it was reported that a technical team from the US EXIM Bank was in Guyana and completed technical and environmental assessments.
With this due diligence completed, President Dr Irfaan Ali, during a press conference on Thursday at State House, disclosed that Government expected the loan proposal to be submitted to the EXIM Bank’s Board of Directors in the coming months.
“The Government of Guyana expects the EXIM Bank to submit the loan to the EXIM Board on or before the third quarter of 2024,” he stated.
In fact, the Head of State related that based on feedback from the technical team that was here, there should be no hindrances to the approval of the funding for the GtE Project.
“The technical team has advised that there are no fatal flaws arising from the technical and environmental due diligence,” Ali stated.
This was in response to a question about local and international lobbying efforts to block the funding for the GtE Project by the US EXIM Bank. Only earlier this month, it was reported that Friends of the Earth United States, a Non-Governmental Organisation (NGO) with over 16,000 members, wrote the Chairman of the US EXIM Bank, Reta Jo Lewis, demanding that the institution not fund the GtE Project.
But according to the Guyanese Leader, “We have never found ourselves in any situation where there was any objection that is fatal to any aspect of the project.”
He went on to further dismiss any concerns occasioned by the recent sanctions imposed by the US Treasury Department’s Office of Foreign Assets Control on two prominent Guyanese businessmen and a government official over gold smuggling and public corruption allegations.
“[The sanctions] are totally unrelated. They’re not concerned at all. This is a Guyana Government project. The relationship between the Government of Guyana and the Government of the United States is different from any relationship between any individual and the United States or any Departments of the United States,” the President noted.
It was announced in April 2023 that Guyana had applied for the US$646 million loan from the US EXIM Bank to finance the GtE Project, which includes the construction of an Integrated Natural Gas Liquid (NGL) plant and a 300-megawatt (MW) combined-cycle power plant at Wales, West Bank Demerara (WBD), utilising natural gas from the country’s offshore operations in the Stabroek Block.
While Guyana awaits funding from the US EXIM Bank, construction works on the Project continues with Government expecting the power plant to come on stream in the first half of next year.
In fact, Vice President Bharrat Jagdeo had said at a June 6 press conference that Guyana would still pursue the project, with or without the US Bank’s loan, noting that there were alternatives available to ensure that this transformative initiative was completed.
“So, it’s moving forward. We’re not desperate, or at a point where we have to stop this project, because the loan is not coming through. And we have several alternatives, too. We’re not a party or a government that doesn’t have contingencies,” Jagdeo explained.
“So, this project will be built. The Gas-to-Energy Project will be completed. It will deliver 300 megawatts of power; it would produce stable, cheaper electricity for the people of this country; and also, from that project, we’ll start becoming an exporter of cooking gas from an importer now, and we will be able to pay back for this project even from the proceedings of the sale of the liquids. And we are firm in that, and it’s going to happen,” the Vice President had insisted.
Jagdeo had previously disclosed that the Government could use bridge financing to get the Project underway until the EXIM Bank loan comes on stream.
The Guyana Government has set aside a whopping $80 billion in Budget 2024 to advance the GtE initiative this year and its associated infrastructure, including transmission and distribution upgrades to offtake the power.
Thus far, the marine offloading facility has been completed, and 26 kilometres (km) of onshore pipeline have been installed by US oil major ExxonMobil. Once completed, the project would allow Guyanese to benefit from 50 per cent reduced electricity costs.
The scope of Guyana’s GtE Project consists of the construction of 225 kilometres of pipeline from the Liza field in the Stabroek Block offshore Guyana, where Exxon and its partners are currently producing oil. It features approximately 200 kilometres of a subsea pipeline offshore that would run from Liza Destiny and Liza Unity Floating, Production, Storage, and Offloading (FPSO) vessels in the Stabroek Block to the shore. Upon landing on the West Coast Demerara shore, the pipeline would continue for approximately 25 kilometres to the NGL plant at Wales.
In last year’s national budget, the project received a $43.3 billion allocation in addition to the $24.6 billion injected into the start-up of the transformational project.
The Guyana Government has envisioned the startup of the GtE Project by March 2025, thus realising its commitment to deliver cleaner, cheaper, and more reliable energy to the population.
But even as Exxon has assured of delivering the pipeline by year-end, when it will be sealed until it is ready for use, the construction of the power plant and NGL facility has been delayed by at least six months. The contractor, a US-based consortium – Lindsayca CH4 Guyana Inc (LNDCH4) – is engaged in a disagreement with the Government over the timelines of the project and associated costs. LNDCH4, which was awarded a US$759 million contract in November 2022 to build the power plant and NGL facility, is making financial claims to the tune of US$50 million over delays from other components of the project which were overseen by Exxon, saying that the late handover would affect its delivery according to contractual timelines.
In light of the delays, the Government has extended the deadline, but the contractor is not satisfied, and wants more time. Moreover, the Guyana Government has rejected the claim, resulting in the contractor moving to a dispute resolution mechanism that would see a three-member board set up to mediate between the two parties. (G-8)
