The three-member panel that had been selected to resolve the US$50 million dispute between the Guyana Government and the contractor for the model Gas-to-Energy (GtE) project, Lindsayca CH4 Guyana Inc. (LNDCH4-Guyana), is expected to conduct a visit at the facility’s Wales, West Bank Demerara (WBD), site.
“The last report I had [was] that the arbiters… will come for a site visit. So, they have to do a site visit… They have to see what has happened on the ground. That was the last report I got last week,” Vice President Dr Bharrat Jagdeo told the Guyana Times during a press conference on Wednesday.
When contacted on Thursday, the GtE Project Lead, Winston Brassington, indicated to this publication that the three-member team is in place and is expected to conduct a site visit. However, he could not say when this would happen.
The Guyana Government and Lindsayca CH4 Guyana Inc. are at loggerheads over the timelines of the project and associated costs.
The Joint Venture formed by United States-based companies, Lindsayca and CH4, was awarded the US$759 million contract in November 2022 to build the 300-megawatt Combined Cycle Power Plant and a Natural Gas Liquids (NGL) facility at Wales – key components of the GtE project.
However, there was a three-month delay in other components of the project that would affect LNDCH4-Guyana’s delivery of the power plant in accordance with the contractual timelines. While the government has extended the deadline by three months, the contractor is not satisfied and wants more time.
Moreover, LNDCH4-Guyana is making financial claims to the tune of US$50 million, stating that the delays would cost the company. The Guyana Government has already rejected this financial claim thus resulting in the contractor activating a dispute resolution mechanism – a process called ‘Dispute Adjudication and Arbitration Board.’
The three-member Dispute Avoidance/Adjudication Board (DAAB) has already been set up to mediate between the Guyana Government and the JV company and at the end of this process, if either party is not satisfied with the outcome, then they can ask for arbitration.
The People’s Progressive Party/Civic (PPP/C) Administration’s flagship GtE initiative is divided into five components: the pipeline from offshore production activities to Wales, then the building of power plant and NGL facilities, the transmission main to move power generated at the power plant, a new control centre at Eccles, East Bank Demerara and upgrading the national power grid.
While LNDCH4-Guyana was given the contract to build the two plants, the procurement and installation of the 225-km gas pipeline from the Wales project site to the offshore oil field is being executed by US oil major ExxonMobil Guyana, which is carrying out production activities in the Stabroek Block.
The installation of the US$1 billion pipeline also includes the upgrade of the roads to get to the site at Wales, the Material Offloading Facility (MOF) and site preparation for 100 acres as well as a lay-down yard – all undertaken by Exxon and subcontracted out. However, there were three-month delays in the handing over of two of these components to LNDCH4-Guyana for them to start their work.
In light of the delays, the government has extended the deadline by three months but the contractor is pushing for a six-month extension alongside the financial claims.
This request, however, was rejected by the government, which was advised by the project consultant, Engineers India Limited (EIL), that the company is not eligible for any financial payments.
Based on the contract, LNDCH4-Guyana is required to deliver 228 MW of power with four gas turbines coming on stream at the end of 2024 at 57 MW each. To get the entire 300 MW, another two steam turbines are expected by the end of 2025.
“What we have is a delay for the four turbines [to be installed]… And the delay, we believe, is by three months so taking it to end March [2025]… [But now] the contractor wants to complete the gas turbines by August [2025].”
“So, that is where we’re arguing the three-month’s delay came from. [The contractors] want a longer period because of the liquidating damages… If they don’t complete the project on time, it’s over US$11 million per month they have to pay in liquidating damages for delay on the project. So, they’re arguing we need more time than the three months but we’re saying three months is adequate for you because that’s the delay we’ve had,” VP Jagdeo had explained back in April.
The Vice President had stated that it is unclear how long the dispute resolution process would take to be determined.
But even as the parties seek to resolve this dispute, the Guyana Government has maintained that this issue would not impact the project and works continue on the ground.
Only last week, Jagdeo reaffirmed government’s commitment to this project even if it means funding it from the local budget. In fact, as Guyana awaits approval for a US$646 million loan from the US Export-Import (EXIM) Bank, the PPP/C Administration has already injected some US$400 million into the GtE initiative – more than half of the project cost.
