GCCI lobbies US EXIM Bank to disregard efforts to block US$646M funding for GTE

The content originally appeared on: INews Guyana

The Georgetown Chamber of Commerce and Industry (GCCI) has written to the United States EXIM (Export-Import) Bank, asking the financial institution to disregard efforts to thwart funding for the Guyana Government’s model Gas-to-Energy Project (GtE) project.

Back in April 2023, it was announced 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 (WBD), utilising natural gas from the country’s offshore operations in the Stabroek Block. That loan is still being processed by the US-based financial institution.

However, on behalf of Elizabeth Deane-Hughes and Vanda Radzik, international lawyer, Melinda Janki, wrote the Bank on January 12, 2024, urging it to withhold funding for the project. In the letter, the lawyer informed President and Chair of the US EXIM Bank Board of Directors, Reta Jo Lewis, of a ruling by the Guyana High Court that the Environmental Protection Agency’s decision to grant the permit to Esso Exploration & Production Guyana Limited (EEPGL) – ExxonMobil’s local affiliate – for the project was “contrary to law and was improper.”

As such, the lawyer asked the EXIM Bank to “respect the rule of law in Guyana” and “not provide funding for any project which is based on a decision that is ‘contrary to law’.”

In a letter dated, February 7, 2024, GCCI’s President Kester Hutson indicated to the US Bank President that the Guyanese business sector fully supports the GtE project, which he described as a “watershed initiative” for the country and its people.

According to the Chamber’s President, the funding from the US Exim bank will significantly contribute to Guyana’s energy transition, reduce reliance on fossil fuels, and promote sustainable practices.

“This project is anticipated to reduce electricity cost by approximately 50 per cent – a material change in the cost of electricity for Guyanese citizens and enterprises alike.

The GCCI sees this project as having immense potential to drive economic growth, enhance energy security, and promote sustainable development in the Western Hemisphere,” Hutson said.

The GCCI President went onto express its deep concerns and strong condemnation of certain attempts by a small minority of individuals to discredit the GtE project and discourage the EXIM Bank from providing financial support for this landmark project.

“The GCCI is especially disheartened to see the vilification of a project that holds significant potential benefits for our nation and its citizens, we are appalled at missives penned requesting that the loan to fund the initiative be blocked.”

“Though the GCCI respects the importance of public discourse and right to differing opinions, it is essential to acknowledge that the comments and actions by these dissenting voices do not reflect the interests of the business community in Guyana which has stated in multiple public forums that we will support any project that helps to lower the cost of electricity,” Hutson stated in the letter to the US Bank.

Moreover, he added that the Chamber, which is Guyana’s oldest and largest business support organisation that represents almost 1000 enterprises in the country, will always be vocal against efforts to stymy the development of Guyana especially those that do not align with the best interest of the country’s economic growth and the aspirations of its people.

“The GCCI remains a continued partner for national development and stands ready to continue its support of the development agenda of Guyana, as it has for the past 135 years,” the Chamber President added.Despite these efforts to halt the financing of the GtE project, the Government is confident that the US EXIM Bank will go ahead with approving the funding.

Only last month, Vice President Dr Bharrat Jagdeo was asked whether government is concerned about the processing of the loan being delayed due because of the letter sent by Janki. However, he said “they’re hopelessly misguided” in their efforts to attempt to block the funding.

“They don’t care that this project will deliver cheaper electricity to our business community and to all of our citizens, that they’d have to pay half of what they’re paying now which could start as early as next year,” the Vice President posited.

While the US EXIM Bank is yet to approve the loan, Jagdeo is confident that this action not impact Guyana getting the financing.

“The EXIM Bank is very much aware of what is going on here in Guyana. They have technical people who follow every single thing what’s going on. They can discern serious interests and serious concerns from a propagandistic nature or a doctrinaire nature, and in this case, that’s what is happening… So, I doubt it’s going to have any impact on EXIM Bank and the provision of the loan.”

“Now, the Bank needs to satisfy itself, which it is doing through its own due diligence process, that the project is feasible because they’re financing it and that it’s environmentally sound, and they’re doing that on their own. I believe that at the end of that exercise before they go to the board, that they would find it positive on both counts – independent of what the loonies say,” the VP stated.

Previously, Jagdeo had disclosed that government can use bridge financing to get the Gas-to-Energy project underway until that EXIM Bank loan comes onstream.The Government has set aside a whopping $80 billion in Budget 2024 to advance the Gas-to-Energy project this year and its associated infrastructure, including transmission and distribution upgrades to offtake the power.

Thus far, the marine offloading facility was completed, and 26 kilometres (km) of onshore pipelines have been installed. Once completed, the project will 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 will 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.