Guyana to start US EXIM bank US$526M loan repayments from 2031

…interest rate for loan fixed at 4%, repayment to last over 15-year span

With the United States (US) Export Import (EXIM) bank recently confirming final approval for a US$526 million loan for Guyana’s Gas to Energy (GtE) Project, Guyana will start repaying this loan from 2031, over a span of 15 years.
This was confirmed by Vice President Bharrat Jagdeo, during a press conference on Friday where he expressed satisfaction with the approval of the loan and also revealed that the interest rate for the loan was four per cent. He explained that the principal repayment for the loan involves 30 semi-annual installments due each November and May, for the next 15 years.
These repayments, according to Jagdeo, kick in from May 1, 2031. When it comes to why the Government chose to borrow this sum to help finance the US$2 billion project, Jagdeo reminded that the loan only contributes to about 25 per cent of this sum.
“We’re happy that the loan has been approved. For those people who’ve been asking why we need to borrow, I want to remind them that this project will cost about US$2 billion and the loan is only about 25 per cent of the project. So, it’s not 100 per cent of the project.”

“The rest is financed by our own resources and through an arrangement with ExxonMobil, on the pipeline. Then the second thing for those who were (trying) to find something negative, they asked why we borrowed. I need to remind them that oil revenue is just 30 per cent of the total budget,” the Vice President said.
Jagdeo also drew the attention of the public to what the EXIM bank itself said in its press statement, when it referred to the GtE Project as a transition to more reliable, clean energy. Additionally, the project will have a significant impact on the country’s balance of payments, as well as substantial savings for Guyanese citizens and companies.
“We will save 460 tonnes of carbon being emitted into the atmosphere, by the implementation of this project. That is equivalent to one million barrels of oil per year. Now if you take 1 million barrels of oil per year and you’re saving that. And the cost of a barrel of bunker is US$100, that’s a $100 million saving per year. Just on fuel.”
“And this all came out of the press release that was issued here. And further, I pointed out that if you sell electricity at the price we’re going to be selling it, at 11 per kilowatt-hour (kWh), which is half the price that is currently obtained, the consumers will save $250 million per year. So, they will save that from lower electricity cost. We will save $100 million from just lower fuel costs.”

Feasibility
The Vice President further pointed out that contrary to the claims that no feasibility study for the project was done, EXIM bank in fact contracted their own consultants to do feasibility studies of a technical and environmental nature, before the loan even went to the board.
“This loan went to the United States congress. It could have been blocked by the US congress, if we did not have adequate answers, if the project was not a feasible one. So those who have been saying (the project wasn’t approved) all along, I don’t want to rub their noses in the dust. But this is a vindication of all we’ve been saying all along,” Jagdeo said.
The Vice President also contended that nothing stopped the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government from launching a similar project when they were in office but they lacked the vision to do so.
The approval of the loan was announced by the Office of the President on Boxing Day, which said in a statement that “His Excellency the President Dr Mohammed Irfaan Ali received a telephone call from the President and Chair of the US Export-Import (EXIM) Bank, Ms Reta Jo Lewis.”

“The EXIM Chair informed President Ali that the Board of EXIM has approved the loan for the Gas-to-Energy Project valued at over $526 million at their Board Meeting held earlier today having completed the thirty-five-day congressional notice period,” the statement also said.
Earlier this month, US Assistant Secretary of State for Western Hemisphere Affairs, Brian Nichols, had confirmed that initial approval was given for the over US$500 million loan for the GtE Project back in November.
Nichols’ comments came on the heels of Vice President Bharrat Jagdeo himself announcing since last month that the loan had been approved. At the time, Jagdeo had said that the Guyana Government had been waiting on the US finance institution to make the announcement first.
However, Jagdeo’s comments had subsequently been challenged by opposition elements such as Alliance For Change (AFC) Member of Parliament David Patterson, who had claimed approval wasn’t given, based on a “source”.