Washington (Platts)--24Sep2007

With the US Department of Energy moving closer to issuing loan guarantees
for advanced energy projects, DOE's inspector general is recommending that the
agency complete plans for staffing the program and minimizing default risks.

     IG Gregory Friedman on Monday praised DOE for its appointment of a
credit review board and a director for the multi-billion-dollar program, but
warned that the agency must do more to establish the program soundly.

     "Programs of this size, complexity and potential political interest carry
with them certain inherent financial and programmatic vulnerabilities,"
Friedman said in a report. "Under these circumstances, and based on past
experience, loan guarantee programs need to be closely managed. While the
actions taken by the department to date are commendable, we concluded that
there are a number of additional steps that should be taken to foster the
success of the loan guarantee program."

     Among those steps are finalizing a staffing plan, developing
risk-mitigation strategies, implementing and executing a monitoring system and
promulgating liquidation procedures, Friedman said. 

     The Energy Policy Act of 2005 authorized DOE to provide loan guarantees
for projects that avoid, reduce or sequester greenhouse gases and employ new
or significantly improved energy production technologies. 

     The department has $4 billion in loan guarantee authority for fiscal 2007
and has requested $9 billion in authority for fiscal 2008. 

     For fiscal 2007, the department has received 143 pre-applications
requesting more than $27 billion in loan guarantees for biomass, solar, energy
efficiency and other projects. DOE has said it planned to announce awards in
January, February or March. 

     Earlier this year, DOE appointed David Frantz as the director of the loan
guarantee program. Frantz was director of project finance at the Overseas
Private Investment Corporation.

		--Bill Loveless, bill_loveless@platts.com