Vice President Dr Bharrat Jagdeo has said he has no qualms about the length of time the United States Export-Import (EXIM) Bank is taking to process the US$646 million loan to fund his government’s highly-touted Gas-to-Energy (GtE) Project. He added that there are alternatives available to ensure this transformative initiative is completed.
It was announced in April 2023 that Guyana had applied for a US$646 million loan from the US Exim Bank to finance the Gas-to-Energy 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, utilising natural gas from the country’s offshore operations in the Stabroek Block. That loan is still to be approved by the US-based financial institution more than a year later.
Asked for an update on the processing of this loan, Jagdeo told Guyana Times at a press conference on Thursday that a technical team from the US EXIM Bank was in Guyana to conduct its assessments on the project.
“They came and they did the environmental assessment on their own… So, there was an independent assessment of the entire project, including the environmental issues. And so I think (that) as soon as that report is ready, then it will go to the [US Bank’s] Board. I don’t know exactly when, but I believe maybe in a month or two,” he indicated.
The Vice President welcomed this independent assessment in light of efforts by some local persons who have joined hands with foreign non-governmental organisations to block the EXIM Bank’s funding of the project.
It was reported as recently as last week 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 does not fund the GtE project.
VP Jagdeo has revealed that Guyana is still pursuing the project, with or without the US Bank’s loan.
“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,” he 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 has insisted.
Jagdeo had previously disclosed that the Government can use bridge financing to get the Gas-to-Energy Project underway until that 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 pipelines have been installed. Once completed, the project would allow Guyanese to benefit from 50 per cent reduced electricity costs.
The scope of Guyana’s gas-to-energy 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, West Bank Demerara.
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 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.
