AIDEA approves $37.7M Interior Gas Utility loan
The Interior Gas Utility got approval for a $37.7 million construction loan from the Alaska Industrial Development and Export Authority board at a special Feb. 5 meeting.
With several members attending via teleconference, the board unanimously approved the loan for development of the utility’s natural gas distribution system.
AIDEA will fund the loan from the $332.5 million Senate Bill 23 Interior Energy Project financing package it was authorized to use towards getting natural gas to the region.
The Sustainable Energy Transmission and Supply Fund loan package is an expansion of an $8.1 million loan AIDEA approved to get IGU’s distribution system work started last spring. It will cover the cost of initial distribution construction in North Pole and installation of temporary gas storage.
IGU was formed by the Fairbanks North Star Borough in November 2012 to spur additional natural gas use in the borough. With little cash or collateral to back it and favorable terms — 1 percent interest and a 48-year payback — the loan to the utility is outside of AIDEA’s normal lending practices because it is SB 23 money.
“(SB 23) pretty much says, do what you need to do to meet the Legislature’s intent,” AIDEA Executive Director Ted Leonard said.
AIDEA’s proposed purchase of Fairbanks Natural Gas, the other gas utility in the area, and its parent company, has put the Interior Energy Project back on a late-2016 timeline for first gas, according to those familiar with the project.
IGU board chair Bob Shefchik said getting natural gas to the utility by the fall of 2016 will give it a customer base and subsequent revenues with which it can pay off the loan.
Elwood Brehmer can be reached at [email protected].