The idiocy of these loan guarantees continues to be exposed. Nevada Geothermal Power (NGP) was bleeding money even when the government stepped in with the loan guarantee. And yet, Senator Harry Reid approved of the loan guarantee, saying that Nevada was set to become "the Saudi Arabia of geothermal energy." Energy Secretary Chu also gave NGP a thumbs up.
The problem, is that the company has been in serious financial trouble for years.
"The company's ability to continue as a going concern is dependent on its available cash and its ability to continue to raise funds to support corporate operations and the development of other properties," NGP auditors said in a financial statement for the period ending March 31.
"Consequently, material uncertainties exist which cast significant doubt upon the company's ability to continue as a going concern," the statement said.
Mr. Reid, a Nevada Democrat who led passage of the $814 billion stimulus bill and worked to include the loan guarantee program to help finance clean-energy projects, predicted in 2010 that NGP would "put Nevadans to work" and declared that Nevada was the "Saudi Arabia of geothermal energy."
Mr. Chu celebrated NGP's potential in his June 2010 announcement of the loan guarantee, saying the federal government's support of the company demonstrated its commitment to geothermal power to achieve the nation's clean-energy goals.
But Rep. Jim Jordan, Ohio Republican and chairman of the House Oversight and Government Reform subcommittee on regulatory affairs, stimulus oversight and government spending, is concerned about NGP's finances and the timing of the loan guarantee.
"The company was in danger of defaulting on its financial obligation, and the [Department of Energy's] assistance served as a de facto bailout," Mr. Jordan said. "After receiving a taxpayer-backed $98.5 million loan guarantee, the company is still struggling."
He said the loan guarantee "essentially served to prop up an already-faltering firm."
At the time the Energy Department announced its conditional approval of the guarantee, Mr. Issa said NGP would have defaulted on a loan from TCW Asset Management Co., then its primary lender, "had DOE not swooped in to save the failing company with taxpayer money."
A committee report said the loan did not finance any new construction and "did not help to create a single job."
More politics at play, I'd reckon. No doubt Harry Reid lobbied for that loan guarantee, which was part of the stim bill he rammed through the senate. Did he, or Chu know that NGP was a failing company? Someone in government must have been aware that the company was in serious financial trouble. This makes the loan guarantee even more stupid.