-also aimed at rolling back Chinese competition
The US EXIM Bank on Boxing Day gave final approval for a long-awaited US$527m loan for the government’s ambitious gas to energy project and its greenlighting is also part of the institution’s pushback against Chinese competition.
The Exim Bank’s press release issued on December 26 said “This project also falls under EXIM’s China and Transformational Exports Program (CTEP) mandate, as the numerous U.S. companies that were ultimately awarded the contract faced direct competition from the People’s Republic of China”.
According to its website, the China and Transformational Exports Program (CTEP) is a mandate for EXIM to help U.S. exporters facing competition from the People’s Republic of China and ensure the U.S. continues to lead in the 10 Transformational Export Areas: AI • Biotech • Biomedical • Wireless Communications • Quantum Computing • Renewable Energy, Storage, & Efficiency • Semiconductors • Fintech • Water Treatment & Sanitation • High Performance Computing.
The award of the loan under this mandate would be perhaps the most prominent recognition by Washington that US companies face stiff competition from Chinese companies here.
The loan covers 25% of the cost of the Gas-to-Energy (GTE) project which is expected to alleviate the electricity tariffs by as much as 50%. It is to be repaid at a fixed 4% interest rate over 15 years, amounting to 30 semi-annual installments. Payments will commence on May 1, 2031, and will be made every May and November thereafter.
During a press conference yesterday, Vice President Bharrat Jagdeo stated, “It is a 4 percent fixed interest, principal repayment is 30 semi-annual installments due and payable on each November and May 1, 2031. So that is when you start paying from and it will be 15 years thereafter”
Jagdeo also emphasized that while the government is pleased with the loan’s approval, it represents only 25% of the project’s estimated US$2 billion cost. He explained that the remaining funds would be financed by the government and through a deal with ExxonMobil on the gas pipeline.
On Thursday, President Irfaan Ali received a call from EXIM Bank President and Chair Reta Jo Lewis, who confirmed the Board’s approval of the loan following the completion of a 35-day congressional review period.
In a statement, President Ali noted, “I am extremely pleased that the Board of Directors approved today’s Gas-to-Energy Project,” said President and Chair Reta Jo Lewis. “I am especially proud to continue to support Bank priorities and charter mandates along with projects that align with the Administration’s economic, energy, and national security priorities.”
US Ambassador to Guyana Nicole Theriot in a statement on the Embassy’s website added that “the project will allow Guyana to transition to more reliable and cleaner energy for consumers and businesses by using natural gas to generate electricity and that the financing will support a U.S. joint venture involving Lindsayca, a Texas-based company, and Puerto Rican small business, CH4 Systems, and services provided by ExxonMobil. This work is being conducted by U.S. and Guyanese companies. 85% of the 500 employees currently supporting this project on site are Guyanese”, she said.
The GTE project is expected to deliver 300 MW of power to the grid upon completion, increasing electricity supply, reducing the carbon footprint per kilowatt-hour, and cutting energy costs for consumers by 50%.
The initial loan application, submitted in April 2023, was for US$660 million, with Vice President Jagdeo previously indicating that part of the funds would finance U.S. exports while the remainder would cover retroactive payments.
In July 2022, the Government of Guyana and the EXIM Bank of the United States signed a historic US$2 billion MoU, with specific focus on infrastructure, energy, water and sanitation, information and communications technology, and agriculture.
The EXIM Bank press release of December 26 said: “Today, the Board of Directors at the Export-Import Bank of the United States (EXIM) approved (US)$527 million to the Ministry of Finance of the Cooperative Republic of Guyana to support a gas-to-energy project that will strengthen the country’s energy security by doubling the country’s installed electric capacity.
“The financing from today’s transaction will aid the construction of a natural gas separation plant, a 300 MW combined cycle gas turbine power plant and services related to the gas supply pipeline near Guyana’s capital, Georgetown. This project will allow Guyana to transition to more reliable and cleaner energy for consumers and businesses by using natural gas-powered turbines to generate electricity. Without this gas-to-energy project, Guyana will continue to import fuel oil, one of the highest polluting fossil fuels, and be unable to decommission hundreds of less efficient local generators. This project will result in a reduction of more than 460,000 tonnes of carbon dioxide per year, the equivalent of consuming more than one million barrels of oil”.
President and Chair of the EXIM Bank Lewis said “Not only is EXIM continuing its support of U.S. businesses small and large, but this project will support more than one thousand jobs across the country. I am especially proud to continue to support Bank priorities and charter mandates along with projects that align with the administration’s economic, energy, and national security priorities.”
The release noted that the financing will support a U.S. joint venture involving Lindsayca, a Texas-based company, and CH4 Systems, a Puerto Rican small business, and services provided by ExxonMobil. The financing will also support more than one dozen U.S. companies. This transaction is expected to support an estimated 1,500 jobs across 11 states and territories.
The Export-Import Bank of the United States (EXIM) is the US’s official export credit agency with the mission of supporting American jobs by facilitating U.S. exports. To advance American competitiveness and assist U.S. businesses as they compete for global sales, EXIM offers financing including export credit insurance, working capital guarantees, loan guarantees, and direct loans. As an independent federal agency, EXIM contributes to U.S. economic growth by supporting tens of thousands of jobs in exporting businesses and their supply chains across the United States. Learn more at www.exim.gov.