KAIETEUR News publisher, Glenn Lall, has launched a vicious attack on the Vice-President following his appearance on his radio programme where the Vice-President availed himself to be interviewed by Glenn Lall. The Vice-President exposed a barrage of falsehoods published in his newspaper on oil-and- gas-related matters and also offered very detailed explanations and clarity on the questions raised, as well as the rationale for some of the government’s decisions on a number of issues.
Against the foregoing background in mind, reference is made to Kaieteur News article dated September 18, 2022, with the caption: “Government advertisement exposes Jagdeo lies on private investment in gas-to-energy project.” Glenn Lall is contending that the Vice-President lied when the question posed to him (Vice-President) on his programme on whether the government is inviting private investors to participate (via ownership) in the project, to which the Vice-President responded in the negative. Glenn Lall was adamant, however, that the government is inviting private investors to participate in the project via ownership. To this end, Glenn Lall referred to a Ministry of Natural Resources advertisement for expressions of interest soliciting private investments in the gas-to-energy project.
Having examined the expressions of interest (EoI), one would quickly recognise that Glenn Lall doesn’t seem to comprehend the difference between soliciting private investors’ participation via equity in a project to share the ownership, versus inviting private investments to essentially invest in the Wales Development Zone (WDZ), which is an area earmarked for massive industrial development. In other words, the government is seeking to build an entire industry around the gas-to-energy project and the only way this can be achieved is by having private investments in both light and heavy manufacturing, for example, and by-products of natural gas among others.
It is not surprising though that Glenn Lall has great difficulty in understanding these basic fundamentals. This was eloquently demonstrated by Glenn when he argued that the Marriott Hotel had private investors, inter alia, Republic Bank. The Vice-President patiently explained to him that Republic Bank was not a private investor wherein they participated through equity financing. In fact, the bank was a financier to the project in the form of debt financing. Extending debt financing in a project does not confer ownership, only in the form of equity one can obtain ownership.
Another example that Glenn Lall often cites is the Berbice bridge. The Berbice bridge is the first-ever public-private partnership (PPP) model designed to finance and build a national development project in Guyana. Again, in this example which comprised private investments, those private investors did not participate in equity finance and hence they do not own the bridge. The bridge is 100 per cent owned by the Government of Guyana.
In a similar manner, the government can solicit a consortium of private investments to build the onshore infrastructure or the gas plant, and they can have a different form of partnership that would allow them to have a decent return on their investment, while the government retains 100 per cent ownership of the facility.
The EoI that Lall is relying on to prove he was lied to by the Vice-President invited private investors for: (i) joint participation with the Government of Guyana and EEPGL in designing or utilising the outputs from an NGL/LPG facility. (ii) Design, construction, and financing of a power plant fuelled by natural gas, where the power will be delivered into the GPL grid. (iii) Industries that can utilise natural gas for natural gas-driven developments and growth. Joint participation does not necessarily mean joint ownership. Nowhere in the EoI was it advertised for private investors to have ownership in the project. The project can be structured to have an optimum mixture of participation, but not private ownership. For example, the natural gas pipeline is financed and built by EEPGL which is an estimated US$1.3 billion on the higher end, but the Government of Guyana will have 100 per cent ownership of same.
Another critical clarification regarding financing of the natural gas pipeline that Glenn Lall has mislead the nation about is that the government will be borrowing this sum and therefore it will be added to the stock of public debt. This is a grossly inaccurate statement by Glenn Lall. The gas pipeline will in fact be financed from cost oil and not by way of any form of debt financing on the part of the government. The government does not have to repay this sum to EEPGL either, it is simply deducted from cost oil. Moreover, this is another huge way in which the government has managed to secure greater benefits for Guyana by not having to use taxpayers’ funds or borrowed money to finance the gas pipeline, given the tremendous amount of economic benefits that will be derived from this project for the country.
Financial Analyst Joel Bhagwandin