The Ministry of Natural Resources issued a Request for Proposals (RFP) today calling for companies to design, finance, construct and fully own the nation’s first refinery.
The facility is expected to process 30,000 barrels of oil per day (b/d) and will be located on land provided by the government at the mouth of the Berbice River in the vicinity of “Crab Island.”
The government’s RFP said it expects construction to start by the first quarter of 2023 with project completion no later than two years after the start date.
Guyana Standard understands that government will provide several incentives to ensure the successful bidder is able to gain a reasonable return on its investments.
Along with the estimated 30 acres of land to be provided, the government said it will also offer generous fiscal incentives for the project including a 10-year tax holiday, supply of feedstock (oil) from the Guyana Government’s share of profit oil at market prices; and access to the domestic market for the sale of refined products (if desired).
Interested companies will however be required to provide several pieces of evidence to prove their worthiness for the project. The requirements as outlined by the ministry are listed below.
I. Evidence of the developer’s capability and credibility to execute such a project. Submissions should include (a) detailed track record of similar projects completed showing role played in design, financing, and construction, date of project start, date of completion, capacity (b/d), and total budget (b) evidence of financial ability, including last 3 years of audited Financial Statements, and (c) details/evidence of financing for this project from own resources or third-party resources.
II. Clear written agreements among the parties listed above including breakdown of proposed shareholding, lead investors/shareholders, and if a consortium, evidence of a legally binding consortium agreement for this project.
III. Site plan for land required (estimated at 30 acres) showing planned utilization and layout of facilities, including storage, and connections to sea or river to allow loading/offloading of crude and finished products. The plan should also show connections to existing road infrastructure for the movement of tankers and other vehicles, to and from site.
IV. Summarized and detailed project schedule including Gantt and accompanying narrative, broken down into pre-development, construction, and operations. Clear descriptions of all key infrastructure works, that will be undertaken by the project including marine/river infrastructure, and on-shore site development should be provided. A timetable should include key milestones for (a) Financial Close and (b) Commercial Operations and Commissioning.
V. Project costs (lump sum) detailing all capital costs (broken down into sufficient detail), financing costs, supervision costs, development costs, and all other costs to date of commissioning/commercial operations. Project costs should allocate a breakdown mix of foreign and local costs against (a) materials (b) labour (c) equipment (d) services (e ) other.
VI. Project structure diagram. Parties should confirm if a Special Purpose Company (SPC) will be created in Guyana and all key contracts and contract parties for the project. All permits, licenses, and permissions, required by law should be stated including the timeframe for the start and completion of these processes.
VII. Business Plan, including financing projections (income statement, cash flow, balance sheet), over a 20-year period from start of operations, and a summary market study showing planned distribution of the refined products. Business Plan should clearly show the separation of fixed costs and variable costs and detail the allocation of expected margin per barrel of refined product: (a) in-bound logistics from FPSO, (b) operating costs (c) outbound logistics, and (d) capital cost recovery.
VIII. List of draft legal agreements required to conclude an agreement including sample drafts or summary of key terms.
IX. Proposed capital structure for financing including related details, such as weighted average cost of capital (WACC), debt/equity mix, cost of equity, cost of debt, and financial flows over the life of the project.
X. Details of proposed local content, including sub-contractors, % of project costs that will be locally sourced, and supporting details of same.
Guyana Standard understands that responses to this RFP will be used to determine a capable partner that will be selected to work with the Government to complete the project based on the timeframes stipulated and evidence of financial and technical ability as well as response to other requirements of this RFP.
All interested persons are expected to register with the Ministry of Natural Resources.
Further information can be obtained by email at [email protected].
