SANTIAGO: The US government is auditing a foreign aid program that loaned almost $1 billion to renewable energy projects in Chile including solar farms in such deep financial trouble that the loans may never be fully repaid, according to people familiar with the matter.

The Office of Inspector General for the US Agency for International Develop­ment (USAID OIG) is examining approximately $890 million of loans approved by the Overseas Private Investment Cor­po­­ration (OPIC), it confirmed in an emailed statement after inquiries by Reuters.

The audit, which began in 2016 and has not been previously reported, is centred on OPICs decision to fund five Chilean solar farms and a hydroelectric project in 2013 and 2014.

OPIC, which aims to advance US interests by lending to overseas business ventures, has come under fire from critics who say private banks are best suited to make investment decisions and that it places too much emphasis on renewable energy. US President Donald Trump proposed cutting funding for any new OPIC projects in his 2018 budget outline released last week.

If OPIC’s funding is cut, it will be due in part to questions about investments such as its loans to the Chilean solar projects. At least three of its five solar projects have started restructuring their debt, according to two people familiar with the projects’ finances. They said OPIC’s losses on the solar deals are likely to exceed $160m.

OPIC in a statement said it was confident it would recover the loans over the coming decades, but acknowledged its original timeline for repayments had changed. The agency, which emphasized that most of its worldwide projects are on firm financial footing, added that it would assess the OIG’s recommendations once the audit is complete.

Such audits of specific OPIC investments are relatively rare - the last was issued in 2015 - and can stem from a number of considerations such as “the level of US funding involved” and “reported concerns over the management or performance of a program,” the OIG said.

The Chile audit, which will result in a public report, will examine “the factors OPIC used to assess and approve its energy projects in Chile,” among several other issues, the OIG said. It expects to finish the audit later this year.

Published in Dawn, May 30th, 2017