re: Ann: Vanuatu Government Adopts World Bank... The announcement that Government of Vanuatu has now adopted the World Bank Report is really a big sigh of relief from management. As we have been all aware, there were local undercurrents, power plays and procrastinations that just delayed the project on the island. The previous ASX ann was a diplomatic statement of solidarity with Unelco to say to the government, "The ball is in your court". Questions still remain of course, such as, does the government realise what 'adoption' actually means, do they know that whitey companies are not all rich and expeditious progress is critically important or else they miss the bus? Access to 'cheap' reliable electric power is crucial to the development of Vanuatu but which some groups will tend to fear as upsetting to their culture.
Overall this announcement is an excellent one in that David McD was able (felt freer) to express and sum up the situation as he knows it. He describes each point superbly. His job has been one of patiently chiselling away at many parts of the mass of variables.
He also makes no bones about the fact that he disagrees with the WB Report view that negotiations on PPA, tariff and production licence should occur after exploration drilling. Big tick. On that kind of basis there could be no development of such a small and therefore expensive power plant. No one is going to get rich on a 4 or 8 MW generating facility even though it will generate income. If Kuth were to spend a sizeable bundle of funds on drilling it needs the guarantee of agreements that the Government will act for project completion. The World Bank report writer would have taken a conservative stance to leave the funding issue to 'others', and not considered the likelihood of the project not even commencing. That is not his job.
The stamp of approval from the World Bank is good and necessary for the step of major capital funding. Kuth has spent enormous effort to generate interest from international banks. For comparison note the following example. The Australian company, Earth Heat Resources has almost no experience and have done very little of actual exploration but its one really amazing achievement is to gain US$75 M of direct funding from the Inter American Development Bank (IDC) for its 40 MW Copahue Argentinian project, and a further commitment to secure another $135 M. This has much to do with the IDC's policy of aiding Climate Change Adaption and Mitigation.
Vanuatu's National Budget is around $80M (2005) compared to Australia's $400 B. The GDP per capita is $5100 (2010) . The breakdown of the Budget is relevant to see what kind of contribution the Government could make directly in the form of grants. Exploratory wells are normally not very deep but in this situation drilling a complete pair of wells may be the way to go - high temperatures appear available at shallow depth. Even a $1M grant would help Kuth with significant working moneys.
This is the time when Kuth does need some additional funding.
Juke
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