Vice President Bharrat Jagdeo, during his weekly press conference, disclosed that CH4-Lindsayca, one of the main contractors the Gas-to-Energy Project, has initiated arbitration proceedings.
It was previously reported by this publication that the two contractors hired by the Guyana Government for the construction of the imminent gas-to-energy project have filed for arbitration over cost overruns to the tune of US$90 million. Today, Jagdeo came to the fore to address the situation, attributing this decision to the project’s delays, which he squarely placed at the feet of ExxonMobil and its local contractor, Guyana Shore Base Inc.
Jagdeo then elaborated on ExxonMobil’s contractual obligations, emphasizing its responsibility for site preparation, including road upgrades, constructing material offloading facilities, and land preparation. He highlighted a three-month delay beyond the June 2023 deadline, during which the site remained incomplete despite additional funding provided to the contractor.
“Exxon was responsible for the site preparation, the road, the MOF…that is the materials offloading facility and the laydown yard. We were supposed to hand over the site to the contractor by June, we did not hand over the site, that is Exxon did not hand over the site, until September, and it was still incomplete, and they handed over an additional US$14M from the $1B that they set aside to the contractor, to complete the site,” Jagdeo noted.
He added, “So, that was three months delay. Who was the contractor that Exxon had? It was GYSBI that was used to prepare this site. So, we had a three months delay by GYSBI and Exxon to hand over the site to the contractor,” the Vice President explained.
Due to this delay, the Government proposed extending the deadline for completing the first component of the project to April 2025, from the initial December 2024 deadline. However, the contracting companies are advocating for a further extension, citing potential liquidated damages exceeding US$11 million per month for project delays.
“…So, they are arguing that they need more time beyond the three months,” Jagdeo explained.
In addition to the dispute over the extended period, the companies are claiming cost overruns of US$90 million. Jagdeo, however, cited a review conducted by Engineers India Limited (EIL), the project’s supervisory entity, which found the claim lacking merit and subsequently rejected it. He was keen to note that the government stands behind this decision.
Consequently, a dispute resolution and arbitration board will be established to address the matter.
Despite these challenges, Jagdeo reiterated his confidence in the project’s completion within the timeline outlined in the contract with CH4/Lindsayca. He emphasized the contractual milestones, including the delivery of 228 megawatts by the end of 2024 and the full project completion by the end of 2025, as per the agreement.
