By Mark DaCosta- The ambitious Gas-to-Energy (GtE) project has been clouded with conflicting statements surrounding a crucial loan from the US Export-Import (EXIM) Bank. While Vice President Bharrat Jagdeo announced on November 28, 2024, that the loan had been approved, an immediate contradiction from former minister of public infrastructure and Alliance for Change (AFC) Chairman David Patterson has raised serious doubts about the timeline and process. These discrepancies have exposed potential miscommunications or misunderstandings about the loan’s actual status and what lies ahead.
On November 28, Jagdeo addressed the press with a bold claim: the US EXIM Bank had approved the loan for Guyana’s Gas-to-Energy project, earmarked at over US$500 million, and was now simply awaiting a 30-day review period in the US Congress. This approval, Jagdeo explained, was the critical financial support needed for the construction of infrastructure, including a natural gas liquids (NGL) plant and a 300-megawatt power station in Wales, West Bank Demerara. The Vice President’s statement – to any reasonable observer – painted a picture of a straightforward and imminent deal — one that was mere formalities away from being finalised.
However, subsequently, David Patterson sharply disagreed with Jagdeo’s interpretation. Patterson, citing correspondence from sources at the EXIM Bank with whom he said that the AFC had been in contact for over a year, revealed that the loan had not been approved during the bank’s November 2024 meeting. Instead, Patterson argued, the loan would only be discussed at the next EXIM Bank meeting, scheduled for January 9, 2025. Even then, Patterson emphasised, approval was far from guaranteed, with the matter needing to pass through another round of scrutiny by the US Congress.
According to analysis, at the heart of the discrepancy lies a fundamental misunderstanding of the loan’s status. Jagdeo’s statements, though technically correct in claiming that the loan was “approved” by EXIM Bank in principle, overlooked – and failed to mention – the complexities that remain. The loan’s approval, in fact, hinges on several further steps before it can be considered final. After the EXIM Bank’s January meeting, the matter must go to the US Congress, which has a 30-day period to review the transaction. Only after this congressional review can EXIM Bank’s board of directors make a final decision.
However, the timing could pose significant challenges. Patterson pointed out that Congress is currently in what is known as a “lame-duck” session — the period following a US election but before the new president is sworn in. During this period, Congress is typically less active and focused on the administration transition rather than new legislative matters. This makes it highly unlikely that Congress will approve the loan before the inauguration of the new US president on January 20, 2025. As Patterson explained, Congress is unlikely to return to this matter until the new Congress takes office in 2025, further pushing the approval timeline back.
In addition to the complications surrounding congressional approval, there is another novel and controversial element: retroactive financing. Jagdeo, in his announcement, revealed that part of the EXIM Bank loan would cover costs already incurred by the Guyanese government — namely, approximately US$400 million already spent on the Gas-to-Energy project. Retroactive financing is a complex financial practice where a loan is used to cover expenses that have already been paid out of pocket by a project’s sponsors. This is reportedly unusual for EXIM Bank, which, according to reports, typically does not approve loans to cover past expenditures unless the bank had been involved in the procurement process, which, in this case, it has not.
Patterson echoed concerns about the retroactive financing, noting that EXIM Bank had not been involved in the procurement phase of the project. This raises questions about the legitimacy and probability of using the loan to cover past costs. Moreover, should the loan receive final approval, Patterson stressed that it would still need to undergo further vetting by EXIM Bank’s meşru and procurement departments. This process, he noted, typically takes six to nine months, further delaying disbursement.
The timeline for the Gas-to-Energy project, which was initially set to be completed by the end of 2024, has already been pushed back to 2025 due to construction delays. Given the uncertainty surrounding the loan’s approval and the potential delays in securing the necessary funding, the completion of the project is increasingly uncertain. These complications have raised concerns about the government’s ability to meet its ambitious goals and whether the promises of reduced electricity costs and a cleaner energy future will be realised as initially envisioned.
According to analysis, Jagdeo’s announcement, while not technically false, appears to have conveyed a level of certainty that is not supported by the facts. His statement about the loan being approved, coupled with the mention of retroactive financing, may have misled the public into thinking that the deal was essentially finalised, when in reality, much remains to be resolved.
For now, said one observer, “on the face of it, it would appear that Jagdeo’s public assurances on this matter may be reasonably viewed with caution until such time as the PPP regime clarifies the current position.”