We all remember Solyndra. It was a producer of solar panels that got government loan guarantees. It went bankrupt. The lenders got paid by taxpayers.
There is another firm that is bordering on a Solyndra event. This one produces components to produce geothermal energy. Its auditors question whether it can stay in business.
The loss to taxpayers will be $98.5 million.
The Washington Times reports that Nevada Geothermal Power (NGP) “has substantial debts and does not generate enough cash from its current operations after debt-service costs.”
Nevada’s Senator Harry Reid was a promoter of this loan guarantee. He said the company would “put Nevadans to work.” However, a recent report by the House Oversight Committee and Government Reform Committee found the loan “did not help create a single job.”
Loan guarantees promote lending to companies that do not meet the standards of the private loan markets. This is why government guarantees are crucial for these loans. These loans re-direct capital from companies that do meet lending standards. As with all government funding, loan guarantees promote inefficient, high-risk projects.
When these loan guarantees are made, politicians say that no taxpayer money is involved. They should add “yet.”
I hope the company makes a successful reversal. I wish it well. Let’s save taxpayers’ money.