SANTIAGO, Feb 5 (Reuters) - The American government has slammed a major U.S. aid agency for lax oversight of renewable energy projects in Chile that stoked risks around the body’s roughly $900 million of investment in the South American country.
The Office of Inspector General for the U.S. Agency for International Development (USAID OIG) said the Overseas Private Investment Corporation (OPIC) had “major weaknesses” in its approval process for solar and hydroelectric projects in Chile.
Reuters reported in 2017 that the U.S. government body was auditing OPIC’s foreign aid program that lent to projects including solar farms in such deep financial trouble that the loans may never be fully repaid.
“OPIC’s process for identifying and mitigating risks in its Chile energy portfolio revealed broader weaknesses in OPIC’s internal control system,” the inspector general said in a 49-page report shared with Reuters.
OPIC, which aims to advance U.S. interests by lending to overseas ventures, has been looking to expand its global financing portfolio to $60 billion, double the previous level.
The body has, however, come under fire from critics who say private banks are better placed to make investment decisions and it has faced threats of having its funding cut.
In the report, the U.S. inspector general said OPIC’s weak controls meant it did not systematically ensure projects aligned with U.S. foreign policy goals and that labour rights and environmental concerns were not sufficiently protected.
The body, which started the audit in 2016, made 16 recommendations to strengthen OPIC’s internal controls. The audit centred on OPIC’s funding of five Chilean solar farms and a hydroelectric project in 2013 and 2014. (Reporting by Fabian Cambero; Writing by Adam Jourdan Editing by Chizu Nomiyama)