Plug Power (NASDAQ: PLUG) stock tumbled during intraday trading Wednesday after a Senate Republican called for an investigation into the DOE’s conditional $1.66 billion loan guarantee to the company.
A leading Senate Republican, John Barrasso, has requested a government watchdog to investigate the recent $1.66 billion financing extended to Plug Power, expressing concerns about potential conflicts of interest and risks to U.S. taxpayers.
In a letter addressed to Energy Department Inspector General Teri Donaldson, made public on Wednesday, Barrasso emphasized the need for transparency and accountability within the Loan Programs Office (LPO). He wrote,
“Given the significant financial implications and the need to maintain public trust, a thorough investigation into the LPO’s conditional commitment to Plug Power is essential to ensure transparency and accountability within the LPO.”
This situation emerged following the Biden Administration’s conditional commitment to support Plug Power (NASDAQ: PLUG) last month, offering $1.66 billion in loan guarantees to facilitate the construction of up to six facilities.
Plug Power CEO Andy Marsh in a press release dated May 14, said,
“Earlier this year, Plug successfully demonstrated our innovation and technical ability by launching the first commercial-scale green hydrogen plant in the country in Woodbine, Georgia. This loan guarantee will help us build on that success with additional green hydrogen plants.”
Concerns Raised by Senator Barrasso
Senator Barrasso, the leading Republican on the Senate Energy Committee, urged the agency’s inspector general to scrutinize “any potential impropriety” by the program and its director, Jigar Shah, a seasoned clean-tech entrepreneur, Bloomberg reports.
The report further states that the company’s shares initially soared, reflecting the significance of the loan guarantee for its growth plans, but they have since retraced much of those gains.
Barrasso expressed concern over the relationship between Shah and a Plug Power lobbyist, purportedly described as Shah’s “longtime friend.” He also raised doubts about, Plug Power’s financial stability, noting a reported loss of over $1.3 billion in 2023.
According to Benzinga Pro, PLUG stock has dropped more than 29% in the past six months.
Barrasso said,
“It also appears that Plug Power only resolved its November 2023 going concern warning in March of this year.”
Barrasso added,
“Such significant losses raise questions about DOE’s prior decisions to provide Plug Power with tens of millions of dollars in grants as well as DOE’s conditional commitment to provide a $1.66 billion loan guarantee.”
The letter underscores the Republican scrutiny of the Energy Department’s loan program, aiming to uncover a potential Solyndra-like failure during an election year, Bloomberg added. President Biden’s climate legislation has granted the program substantial new loan authority, amounting to hundreds of billions of dollars, making the transparency and accountability of such financial commitments even more critical.
Plug Power (NASDAQ: PLUG) Stock Reaction
On Wednesday, PLUG stock plunged 6.52%, closing at $3.01, marking a 5.94% decrease for the week. The trading volume was 59,261,412 shares, significantly higher than the average daily volume of 34.24 million.
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