At the end of July 2020, the Guyana Power and Light Inc. was neck-deep in debt totalling US$201.7M or about $42.4B. Guyana Standard was able to confirm this following a perusal of a Brief on Government Lending to GPL. The document notes that US$151.7 million or about $31.6 billion of the debt represent on-lending loans, while US$50m or about $10.8 billion represent loans given directly from the Treasury.
The report explained that an on-lending arrangement is one whereby the Government obtains a loan, usually concessional financing from an international financial institution such as the China Export-Import (EXIM) Bank or the Caribbean Development Bank, and then passes on the loan principal to another entity, usually a State-Owned Enterprise (SOE), known as the beneficiary. The loan between Government and the international financial institution is often referred to as a primary loan and the on-lent loan between Government and the beneficiary is called the subsidiary loan.
From 2007 to 2020, the Government has been lending monies to GPL and since then, there have been seven on-lent loans and three direct loans given from the Treasury. The three direct loans were all given to GPL in the first half of 2020, to finance the 46 Megawatt’s Dual-Fuel Power Plant Expansion Project at Garden of Eden.
Presently, there are three draft agreements to be finalized with GPL. The Government had contracted two Inter-American Development Bank (IDB) loans in 2011 and 2014 as well as one IDB grant in 2014, all of which GPL is the beneficiary. Over the years, the Debt Management Division of the Finance Ministry has repeatedly requested that GPL finalise and sign these agreements. But this is yet to be done.
