The timeline for the delivery of first gas from Guyana’s Gas-to-Energy project hinges on the outcome of the ongoing arbitration process between the government of Guyana and CH4-Lindsayca.
Vice President Dr. Bharrat Jagdeo confirmed this during his recent press conference. The dispute arose over cost overruns and delays linked to the construction phase of the project, which aims to deliver 228 megawatts of power by 2024.
“If we win in the arbitration and they stick with that schedule, then there would be liquidating damages. That would be US$11 million, I think, per month,” Jagdeo stated, emphasizing the significance of the arbitration proceedings for the project’s timeline.
The project, awarded to CH4-Lindsayca in November 2022 for a sum of US$759 million, involves the construction of a 300-megawatt power plant and a natural gas liquids (NGL) facility at Wales, West Demerara. However, delays in site preparation, which were the responsibility of ExxonMobil and its subcontractor, Guyana Shore Base Inc. (GYSBI), led to the site being handed over to CH4-Lindsayca in September 2023, three months behind the scheduled June deadline.
“We have an arbitration now taking place. So, if we win the arbitration, they would have only by April to deliver this project,” the Vice President noted. He further clarified that the government has only approved a three-month extension to the contract, pushing the project’s completion deadline from December 2024 to April 2025. However, the contractors are seeking a longer extension and additional funds.
CH4-Lindsayca has filed for arbitration, claiming an additional US$90 million in project expenses due to the delays. The Vice President stressed that the government’s proposal is aimed at balancing the interests of both parties while ensuring the project benefits the Guyanese population.
“The company doesn’t want that. They want to take a bit more because we’re going to be selling, generating at four cents and selling at 11 cents. But the people in Guyana will see their bill cut by half, and they will save over US$100 million per year,” Jagdeo said, adding that this would also strengthen the financial position of the Guyana Power and Light (GPL).
The arbitration panel, set to visit Guyana in October, will conduct a site visit to assess the situation firsthand. Jagdeo recently confirmed the visit, stating, “I must say that I thought they were visiting last week, but I was told that it’s in October that the visit will take place by the arbitration panel.”
The contractors are concerned that the government’s proposed April 2025 deadline may still be insufficient, and further delays, if the government wins the arbitration could result in liquidated damages exceeding US$11 million per month. Despite this, the government remains committed to completing the project by the end of 2025, as stipulated in the original contract.
Jagdeo assured that the reduction in electricity costs would be almost immediate upon the project’s completion. “It should happen almost immediately because if we’re getting all this power in the grid immediately, that means we can turn off a lot of the high-cost generating equipment that we have now and substitute this with the new power plant.”
