Rep. [crscore]Mike Pompeo[/crscore] is demanding information on Abengoa, a Spanish green energy firm on the brink of bankruptcy that could leave U.S. taxpayers on the hook for billions of dollars.
The Kansas Republican is worried Abengoa’s bankruptcy could stick taxpayers with the bill in light of recent news the company’s single largest creditor is the Federal Financing Bank (FFB) — a government-owned bank operated by the Department of the Treasury.
“Recent news that Abengoa, a Spanish green energy company, is entering into bankruptcy proceedings this last week has shed light on an issue of extreme concern for the American taxpayer,” Pompeo writes in a letter to Secretary of Energy Ernest Moniz and Secretary of the Treasury Jack Lew, demanding information from the agencies on how they plan on handling Abengoa’s potential failure.
Abengoa began bankruptcy proceedings in Spain last week, and the Spanish news outlet Expansion reported the FFB had $2.34 billion in holding with the failing green energy firm at the end of September. The FFB did not comment on its holdings in Abengoa, so it’s not clear if it still holds more than $2 billion or if it reduced its exposure.
“Even more troubling is the fact that FFB’s exposure to Abengoa’s bankruptcy is solely in the financing of projects approved in the DOE green loan program, the very same program that exposed taxpayers to $535 million in losses during the Solyndra bankruptcy,” Pompeo writes to Moniz and Lew.
Pompeo has good reason to be concerned about Abengoa’s bankruptcy as its $400 million biofuel plant is in his district. Abengoa received a $132 million Department of Energy (DOE) loan and $97 million to build a cellulosic ethanol plant to make “advanced” biofuels. The plant is supposed to produce 25 million gallons of biofuels a year, but has yet to put forward any production numbers.
An Abengoa spokesman told The Daily Caller News Foundation last month the biofuel plant outside Hugoton, Kan., produces “significant volumes of cellulosic ethanol,” but has yet to sell any of the fuel produced at the plant.
Abengoa benefits from $2.7 billion in DOE loan guarantees under President Barack Obama to build two solar power plants and its Hugoton biofuels plant. The company, however, has only fully repaid the loan on its Hugoton plant, according to the DOE, while it still has outstanding payments for its other projects.
Pompeo warns an Abengoa bankruptcy could cost taxpayers considerably more than past DOE-backed companies that went bankrupt. The solar panel company Solyndra went bankrupt in 2011 after getting a $535 million loan from DOE.
Solyndra’s bankruptcy triggered a wave of political backlash against DOE’s green energy loans. DOE repeatedly argued its loan portfolio has only had a few failures and is bringing in billions of dollars in interest payments.
But the Government Accountability Office reported in April that the DOE’s $28 billion loan program will cost taxpayers $2.21 billion over the lifetime of the loans. The “credit subsidy cost of the loans and loan guarantees in its portfolio” is expected “to be $2.21 billion, including $807 million for loans that have defaulted,” GAO reports.
“To put this in perspective, the Abengoa bankruptcy exposes taxpayers to losses four times greater than Solyndra, making it the largest failure of the DOE green loan program to date,” Pompeo writes.
Update: DOE spokesman Bart Jackson responded to TheDCNF’s article:
“The Department of Energy’s Loan Programs Office (LPO) does not have any loans to Abengoa S.A. LPO currently has two active projects in its portfolio that were developed by Abengoa: Solana and Mojave. The loans for these projects were issued to project companies. In addition, LPO financed a cellulosic biofuels project developed by Abengoa, Abengoa Bioenergy Biomass of Kansas, which recently repaid its loan in full. Both Solana and Mojave are currently operating and repaying their loans with principal and interest.”
“The Department’s overall loan portfolio is performing very well, thanks to LPO’s rigorous due diligence, strong underwriting, and effective loan monitoring. Losses to date represent approximately 2 percent of the overall loan portfolio, while the successes of the program have supported a host of new jobs and more than $50 billion in total investment. Further, project companies supported by LPO have already repaid more than $6 billion, including more than $1.2 billion in interest payments, to the U.S. Treasury, which issued the loans guaranteed by the Department through the Federal Financing Bank. These amounts will continue to increase as the loans are repaid over the coming years.”
While DOE loans went to “project companies,” these were created by Abengoa S.A. to manage projects financed by government-backed loans. This type of arrangement is commonplace for Abengoa, according to Bloomberg News. The company has “607 subsidiaries in 2014, as well as 17 associates, 28 joint businesses and 244 temporary joint ventures spread out over more than 50 countries,” according to Bloomberg.
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