Following successful negotiations that have resulted in a reduced cost, government is finalising a US$759 million contract for US bidders CH4/Lindsayca to build the 300 MW Combined Cycle Power Plant and a Natural Gas Liquids (NGL) Plant at Wales, West Bank Demerara (WCD), Vice President Bharrat Jagdeo announced on Friday.
“…We are extremely pleased that this week we have finally wrapped these up… that the mobilization could be paid and that we are on the way to the construction of this facility that would transform Guyana in terms of stable power, in terms of cost of power,” Jagdeo told a press conference.
The decision comes roughly one month after President Irfaan Ali announced that Cabinet had issued its no-objection to US-based CH4/Lindsayca being ranked number one to build the two plants under an Engineering Procurement Construction (EPC) contract.
Jagdeo told a press conference at the Office of the President that Cabinet met and finalised the award of the contract to CH4/Lindsayca.
He noted that the company’s initial US$898 million bid made provisions for a number of things not provided for as part of the manufacturer’s requirement, which were removed during negotiations.
“So those were removed, and based on the original scope of the contract, the bid price, the final price came down to US759 million,” he said.
Jagdeo mentioned that the requirement for this project to be completed by December 2024 was one of the key features that led to the selection of CH4/Lindsayca.
“It would allow us in two years’ time to reduce the power cost by 50%. It would transform us from now an importer of cooking gas to an exporter of cooking gas and that facility will belong to the government of Guyana, not Exxon, the power plant and NGL facility,” he added, before saying that the contracts, including the supervision by Engineers India Limited, are about to be finalised before yearend.
Briefly addressing funding for the project, Jagdeo said that there was over $20 billion already budgeted for the first payment “and then we are trying to structure this, maybe through a loan where we would be approaching Exim Bank US.”
Stabroek Block operator ExxonMobil Guyana is expected to deliver the completed gas pipeline to the Wales facility by the fourth quarter of 2024, to achieve commissioning and testing of the 300 MW power plant by the end of 2024.
On its website, the Texas-based Lindsayca said it was founded in 1995 through private equity and family ownership. It said that Lindsayca has rapidly expanded initially in Venezuela, providing services to both state- and privately-owned clients in the upstream and downstream energy sector.
Meanwhile, the CH4 Group describes itself as an “Engineering, Procurement, Construction (EPC), project management, operation and maintenance group of companies, with extensive experience in the areas of the electric power, oil, gas, petrochemical, mining and infrastructure”.
With the announcement of Lindsayca’s selection, local opposition party the AFC had questioned the company’s experience in delivering a project of such magnitude.
Jagdeo yesterday said the company currently has two contracts that are worth over US$1.1 billion combined as he dismissed the research done by the party.
In his announcement last month, Ali had said that the project is expected to deliver power at less than half of the current costs. “Project generation costs, taking account of payment for the pipeline, operations and maintenance (O&M), and capital cost recovery, shall total less than five (5) US cents per kilowatt-hour,” he said.
Of the US4.5 cents per KWH that will be paid, he said it “includes paying back for the pipeline, the LGN, facility and the operational costs.”
Earlier this year, he noted that nine firms were publicly pre-qualified to bid on the EPC contract. A Request for Proposals (RFP) was issued to these pre-qualified bidders. At the closing date of September 13th, five bids were received. These bids were evaluated for technical compliance and ranking by Stantec and Worley, two global engineering firms with expertise in oil and gas, the President said. Based on the reports of these international firms, an Evaluation team of three people, including a representative of ExxonMobil, was appointed. He said that the Evaluation Team conducted the evaluation in accordance with the technical and economic criteria set out in the RFP. On the basis of the bids submitted and clarifications received, the Evaluation Team unanimously ranked CH4/ Lindsayca as number one, and Power China as number two.
The project aims to employ approximately 800 workers during the peak construction stage and 40 full-time workers during the operation phase.
It will be executed in three phases – construction, operation and decommissioning. It entails three aspects as well – an offshore pipeline which is approximately 220 kilometres of a subsea pipeline extending from new subsea tie-ins at the Destiny and Unity FPSOs in the Stabroek Block to the proposed shore landing, located approximately 3.5 kilometres west of the mouth of the Demerara River; onshore pipeline that is a continuation of the offshore line and extends about 25 kilometres from the landing site to the NGL plant; and the NGL plant and associated infrastructure that will be located about 23 kilometres upstream from the mouth of the Demerara River on the west bank.
Both the Liza Destiny and Liza Unity floating production storage and offloading vessels, which are operating in the offshore Stabroek Block, have pre-installed facilities to allow for the export of the associated gas with crude production.
