Guyana’s US$646M loan for GtE: Project to go before US EXIM Bank Board in October – Jagdeo

The United States (US) Export-Import (EXIM) Bank is gearing up to advance to the next stage of considering Guyana’s US$646 million loan request for the model Gas-to-Energy (GtE) Project.

Back in April 2023, it was announced that the Guyana Government had applied for the loan from the US EXIM Bank to finance the US$761 million 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.
Last week, Finance Minister Dr. Ashni Singh met with senior officials of the US EXIM Bank in Washington DC during which discussions were held on the loan.
Providing an update on those talks, Vice President Dr. Bharrat Jagdeo disclosed during a press conference on Thursday that the Bank is preparing to submit a report to its Board at a meeting next month.
“They’re aiming to go to the Board – that’s what was said to the minister – by the October Board meeting. But that all of the technical and environmental work have been completed and they have all of the information necessary to go to the Board. Thereafter, they’ll have a 35-day notification… It has to be notified to the Congress for 35 days, then it comes back to the EXIM Bank Board and then the loan will be approved,” Jagdeo stated.
As part of its internal due diligence process, the US EXIM Bank hired two consultants – Ramba Consulting Group, a professional governmental consulting firm which did an environment assessment of the GtE Project, and Sargent & Lundy, one of the world’s longest-standing full-service architect engineering firms, which did the technical assessment.
These works were done during site visits over the past year. In fact, back in June, President Dr. Irfaan Ali had revealed that the feedback from those two assessments were positive. He said the teams found “no fatal flaws” from the technical and environmental due diligence work done here.

According to the Vice President on Thursday, “They have satisfied themselves that [the project] is technically sound and have reported back to the EXIM Bank management. The Environmental consultants came in, they had questions and we answered all those questions, and they’ve gone back and said the project is environmentally sound.”
“Those are the two things that were necessary. So, when they go to their Board, they will say we have done our due diligence, the project is technically and environmentally sound because the financial case is already made,” Jagdeo posited.

Potentially fund initiative
However, even as Guyana awaits the approval of this loan, government has already spent some US$400 million on the highly anticipated GtE Project and could potentially fund the entire initiative if the request from the US EXIM Bank is not approved.
VP Jagdeo told reporters at a press conference last month that, “Because of the delay of the loan [approval], we have, from our own resources, paid about US$400 million. So, more than half of the project [was paid] from our own resources.”
The Vice President explained that the aim was to borrow approximately US$650 million from the US Bank to fund the GtE initiative. The Guyana Government was expected to put up the other US$100 million, as advanced payment, to support the initiative.
However, with Guyana already injecting more than half of the project cost into advancing the works, Jagdeo said this augurs well for the country.
“That’s even better for us. [With] the loan from EXIM, we can get reimbursed for [the money we spent] because of the way it’s structured. But just to tell you, the project will be done and whereas, even if it means carrying it from our own budget. And the country should even be happy about this; that we managed to carry [the works done so far] from our own budget and still do all the other developments we’re talking about,” he contended.
VP Jagdeo had previously explained that the loan can fund retroactive expenditure hence government could use bridge financing to get the works going. Bridge financing is a short-term financing option in order to fund a project before the financing is expected.
This year alone, the Guyana Government has set aside a whopping $80 billion in Budget 2024 to advance the GtE initiative and its associated infrastructure, including transmission and distribution upgrades to offtake the power.

Efforts to block
Meanwhile, there has been local and international lobbying efforts to block the funding for the GtE project by the US EXIM Bank.
Earlier in June, it was reported that Friends of the Earth United States, an NGO with over 16,000 members, wrote Chairman of the US EXIM Bank, Reta Jo Lewis, demanding the institution do not fund the GtE Project.
However, these efforts have been dismissed by the Guyana Government and even the local private sector had written the US financial institution to declare their support for the transformative GtE Project that will not only provide cleaner energy but also cut the country high electricity costs by half.
Nevertheless, 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.
Government had initially envisioned the startup of the GtE Project by this year end. However, 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, 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 financial claim, resulting in the contractor moving to a dispute resolution mechanism that has seen a three-member board set up to mediate between the two parties.
The arbiters are expected to conduct a site visit sometime soon, the GtE Project Lead, Winston Brassington, told the Guyana Times last month.
Government has already assured that this dispute is not affecting construction works, which continues uninterrupted. (G8)