The United States used its voting power in October on the Board of the Inter-American Development Bank (IDB) to deny Guyana Shore Base Incorporated (GYSBI) a US$180 million loan after it had gone through a two-year approval process, a move that has grave implications for Guyana’s developmental trajectory, according to the Company’s Executive Director Robin Muneshwer.
The company had approached the IDB for financing to facilitate its expansion plans to service the growing oil and gas sector and went through all the regulatory phases.
The summary of the proposal, submitted in April of last year, stated that the company was seeking the support of IDB to refinance certain existing bridge loans, expand GYSBI’s port and shore base facilities through the construction of four additional berths, increase the size of the Shore Base logistics support area, develop and construct an infill project that would allow offloading of heavier cargo, purchase and construct a waste management facility, install rooftop solar photovoltaic (PV) capacity to meet GYSBI’s energy needs, and construct additional warehouse capacity.
Muneshwer, during an interview with Stabroek News on Friday, explained that much of the company’s projects are either financed by partners, reinvestment of profits or collaboration with local banks. However, the single borrower limits and other financial limitations of the local banks had GYSBI looking beyond Guyana hence the reason for approaching the IDB.
Providing insight into the process that led to the loan being denied, GYSBI’s Chief Financial Officer Robert Albiez said that about two years ago the company approached the IDB since they were looking for large financing.
“We started looking at something a little bit bigger and longer-term plans and we started to pursue a large scale financial project with the IDB. And it was about a two-year process. So it takes a great deal of due diligence on the legal side, the environmental side, the construction and engineering side. They (IDB) basically look at every single aspect of what you’re doing, make sure you’re doing all the right things in the local environment etcetera,” he said.
The company submitted to the IDB not only its expansion proposals but an Environmental Assessment and Environment Management Plan had already gotten approval from the Environmental Protection Agency.
This Environmental Assessment (EA) address-ed the proposed improvements to the Port’s transport and logistics improvements and acknowledged that the Project could also potentially lead to “negative environmental and social impacts during its construction and operation.”
Albiez said that a US$10 million solar power project was also included in the proposal and that was voted down as well.
“The United States as a voting member on the approval board (of the IDB voted down the loan)… and a policy change in the White House had been directed to all of these lending institutions where the US cooperates, they would no longer be supporting any sort of funding to support the oil and gas industry.
“So right then and there on the spot our two-year project died and we’ve gone back to the drawing board as to how we’re going to fund the further development expansion…that was in October of last year and we were told it was the first time in history that that had ever happened. You know to get to the phase that we were at and that board vote was meant to be nothing more than a formality and the US flexed its muscle with regard to its policy, and basically inflicted that … upon us here in Guyana,” Albiez explained.
Grave implications
Albiez said that the loan was denied by the US after current President Joe Biden came into office and effected sweeping changes as to the environmental mandate of his government. An executive decision was taken not to back new oil and gas development projects and according to the Finance Director, the US has been wielding that power with major financial institutions like the International Monetary Fund and the World Bank as well.
“IDB told us that they are not considering anything else, anything oil and gas-related in Guyana specifically. I don’t know what they’re doing worldwide, but their [IDB] lead told me that that was the deathblow for them developing any projects related to the oil and gas industry in Guyana…we reached out [to] IMF, World Bank [and] we were told the same thing that the US is using their leverage in their position as voting members on all of those boards to block any support.
“It was a very blunt instrument they used against us…I would like to be clear, I don’t feel that it was the IDB that let us down so much as the US interference and their direct mandate to not support the project,” he added.
In that regard, Muneshwer said that the move has grave implications for Guyana and its development. He explained that the company was aware of a short window of opportunity to get its financing since they were informed that the policy change would not be effective until 2023.
“Otherwise nobody, IDB nor us, would have invested all this time and energy into this whole exercise. So that’s why it came to us as a great shock. Look guys we know how the world is shaping up and institutions all over the world are shutting down loans to the oil and gas industry, so we were shocked that this just came down so hard on us. The second thing is that this directive came specifically from the White House. … we got good support from the local embassy here, American Embassy, with the IDB as well but the directive came from the White House,” he said.
“What does this mean for Guyana and the rest of the world? Well, it means once again, you know, these western countries have shown themselves to be a bunch of nothing less than hypocrites. They’ve developed their world at the world’s expense. They’ve developed their empire and wealth and they’re imposing their standards on very small countries like us,” Muneshwer added.
He also pointed to Guyana being a carbon sink to make the point that his company is developing sustainably.
“We have not ripped and pillaged the earth as they have. That’s hypocrisy…they’re inhibiting the growth of our countries. Further to that, they’re indirectly helping the other countries that have established gas industries to continue to function. This is a shore base, this is a logistics hub. We’re not a direct producer of oil and gas,” he argued.
Now GYSBI is looking to further partner with local banks to secure the financing. Muneshwer said that the government is also aware of the situation.
