Nevada Geothermal can certainly take some solace in the loan guarantee it received through Department of Energy, but the amount of liabilities currently carried by the financially troubled renewable energy company far exceeds the government loan to the company.
The Department of Energy announced a partial guarantee of $98.5 million, which the New York Times estimates will amount to a $76 million loan guarantee. The total liabilities carried by Nevada Geothermal – $163 million, according to an auditor’s report on the company- more than double the amount of such a loan. The auditor emphasized the company’s “anticipated inability to retire its long term liabilities” among the reasons for “significant doubt about the Company’s ability to continue as a going concern.”
That common Wall Street phrase is precisely the one used to describe Solyndra last year.
The auditor wrote that the company would need to “continue to raise funds to support corporate operations” in order to survive. Whether the Energy Department loan will right the ship remains an open question, as the auditor did not consider “any adjustments that might result from the outcome of [fundraising] uncertainties.” The auditor filed the report on June 30th of this year. The Energy Department loan guarantee came on September 7th.
The loan guarantees program pulls money from 2009 stimulus funds – the same stimulus package that Vice President Joe Biden said failed to fix the economy because it was “undersized”, while most conservatives believe that the stimulus was a bad idea in the first place. Following that same logic, is a loan guarantee that covers less than half of a struggling company’s debts a big enough investment? Or is it just a bad investment?
Apparently, the Department of Energy will either save Nevada Geothermal or simply waste $76 million of taxpayer money.
