By Timothy Gardner

WASHINGTON (Reuters)

The inspector general of the U.S. Department of Energy urged the agency's loan office to immediately halt issuing billions of dollars in loans to green projects. She cautioned that contractors vetting these projects may have conflicts of interest.

In an interim report issued late on Tuesday, the Watchdog urged the DOE's Loan Programs Office (LPO) to stop financing until it can ensure compliance with conflicts of interest regulations.

The LPO manages more than $385 billion in low-interest loans for green energy projects including batteries, nuclear power, and advanced vehicles. The LPO has around $20 billion in loan authority remaining before President Joe Biden leaves office on January 20. Notably, the LPO issued a record $15 billion conditional loan to California-based electric utility PG&E earlier on Tuesday.

A DOE spokesperson asserted the interim report is filled with errors, stating, "The Inspector General fundamentally misunderstands the implementation of contracting in LPO. We are confident LPO is fully compliant with all conflicts of interest regulations."

Jigar Shah, head of the LPO, stated in response to the interim report that, despite a comprehensive audit of over a hundred contract files, no organizational conflicts of interest have been identified.

The inspector general, Teri Donaldson, will issue a complete report upon finalizing her work. Donaldson was appointed as DOE's inspector general in 2018 after being nominated by then-President Donald Trump. She previously served as general counsel for the U.S. Senate environment committee under Senator John Barrasso, who has criticized the LPO for alleged favoritism.

A DOE spokesperson confirmed that the agency will continue its work as mandated by Congress.