West Indies Power will not be able to count on a US $63 million sovereign debt loan guarantee for a loan with U.S. Exim Bank for its Nevis geothermal power project.
Reported last week, the geothermal power project on Nevis in the Caribbean, will not be able to count on a “US $63 million sovereign debt loan guarantee, according to the island state’s Energy Minister Carlisle Minister.
“We are not responsible for capitalizing the project. That will be done by the owners of the project, which are West Indies Power Limited/Renovo Capital. They are the ones who have made advances to EXIM Bank to get funding for the geothermal project,” Minister Carlisle Powell said at a recent media briefing.
The Nevis Island Administration has signaled for months that it would pursue a loan guarantee for West Indies Power (WIP), the developers and operators of the Nevis Geothermal plant.
“What we have in Nevis from the government point of view is an agreement with West Indies Power Limited; West Indies Power Limited now involves partners Renovo Capital out of the Unites States of America, and we signed a power purchase agreement with them,” the Minister said.
Mr. Powell then disclosed that the NIA had taken the sovereign loan issue off the table.
“We signed a loan guarantee with West Indies Power Limited. That has since been recalled,” he said.
“I’ll tell you why. Everybody in this room must know that we are…in an arrangement with the IMF, because of that and the debt restructuring…we have had to look carefully at the loan guarantee which becomes part of what the government could technically owe.”
Minister Powell said that the NIA would still end up guaranteeing the loan through the power purchase agreement.
“I must say…that that is something which we asked them to do from the beginning. But they preferred to have a loan guarantee. They are now going to use the power purchase agreement which is just as strong.”
He told reporters that under the power purchase agreement NEVLEC – local electricity company – was committed to buying 10 megawatts of energy from West Indies Power Limited/Renovo Capital at an “agreed price.”
“Inside the power purchase agreement and the contract it already says if NEVLEC cannot pay then the owner of NEVLEC will have to pay. The Nevis Island Administration own 100 percent of the shares of NEVLEC so it comes straight back down to the government in any case,” Minister Powell said.
West Indies Power Limited was awarded a geothermal contract in 2006 and completed exploration in 2007. In 2008 the company said it discovered a more than 300 megawatt resource on the island. In 2009 the well field and engineering plant designs were reportedly completed, while last year the focus was on engineering and funding.”