-but project proceeding as planned
The arbitration board that will settle the US$50 million dispute between government and Gas-to-Energy (GtE) Project contractor, CH4/Lindsayca, has not yet been set up as both sides are still in discussions about who the third member will be, government says.
However, although the adjudication process has been stalled, it will not affect the continuation of works at the Wales, West Bank Demerara site and the installation of piles is set to begin early next month.
“The third member [Chairman] of the DAAB [Dispute Avoidance/Adjudication Board] is being discussed between Lindsayca and Govt. Only after the third member is in place, will the 3-member board of the DAAB start work. As such, the Lindsayca claim is yet to be formally placed before the 3-member DAAB,” GtE Project lead, Winston Brassington stated.
Vice President Bharrat Jagdeo had disclosed that the company had moved to a dispute adjudication board as it was locked in a stalemate with the Government of Guyana over the sum of US$50 million the company felt it was owed because the Wales, West Bank Demerara project site, was delivered to it three months late.
Disputing a Reuters report which stated that the contractors for the project had taken government to arbitration for US$90 million for cost overruns, Jagdeo said the government was advised, following a review by its supervisory project consultant, Engineers India Limited (EIL), that the claims lacked merit. “It is US$50 million, not US$90 million…,” Jagdeo clarified.
This dispute and delays to parts of the project underline the high stakes in play for the government in what will be the largest ever public sector project in the country’s history and one that is coming with the promise of a cut in power rates by 50%.
Although this means that only one aspect of the project will be delayed, and it will not interfere with the overall end of 2025 project schedule, it was the first time the PPP/C government acknowledged that it is at loggerheads with the project site contractor and that an arbitration hearing was pending. This was first reported by Reuters on April 8.
“Why did this happen? As I said, [the government] was responsible for the site preparation; the road, the materials offloading facility [MOF], and the laydown yard. We were supposed to hand over the site to the contractor by June, [but] 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$14 million, from the US$1 billion that they set aside, to the contractor, to complete the site… Who was the contractor that Exxon had? It was GYSBI [Guyana Shore Base Inc.] 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 had explained.
“We have now decided that we will give them an extension of three months. That is from the end of 2024, an additional three months. That is why we are arguing the plant must be completed by end of March, 2025 instead of end of March 2024. GAICO was to do the MOF handover by July to Exxon, to the contractor. This was done until September [and] they still had some issues with that. They [CH4/Lindsayca CH4] want a longer period, because the liquidated damages for not completing the project on time for the contractor, if they don’t complete the project on time, it is over US$11 million per month. They have to pay liquidated damages for delays on the project. So they are arguing that they need more time, beyond the three months. We are saying, three months is adequate for you because that is the delay that we’ve had,” he added.
On Thursday, Brassington was asked if works have been stalled due to the adjudication process.
“No. Works have not stopped or slowed down. Lindsayca has confirmed that work will continue despite the pending dispute,” he responded.
He updated that pile driving will begin next month with foundation works set to begin in August.
“The first batch of piles have arrived at the site via the new Materials Offloading Site. Pile installation will start in June. Foundations are expected to start in August.”
In February of this year, after rebuffing public qualms about the timeline, Brassington had announced that part of the project would be delayed by months but that its completion would still be the end of next year. The timeline deferral, according to Brassington, was due to a number of factors including supply chain impediments and works delays. He did not cite the arbitration dispute.
The GtE project is divided into three components – Pipeline, Power/NGL Plant, and Transmission Line/Substations. The Pipeline component includes a 250-kilometre, 12-inch pipeline from two Floating Production, Storage and Offloading platforms (FPSOs), to deliver some 50 MCF/D (1,000 cubic feet per day) of gas to shore, although the pipeline has the capacity for 120-plus MCF/D.
The Power/NGL Plant component is the 300 MW Combined Cycle and NGL while Component 3 will have Transmission Line/Substations of 85 kilometres of 230 & 69 KV transmission lines, 3 new substations, and upgrades to 2 other sub-stations.
ExxonMobil has stated that the laying of the pipelines will be completed by the end of this year and the pipes will be filled with nitrogen until government’s completion of the integrated plant.
Brassington meanwhile, disclosed that “the four Siemens gas turbines have already been manufactured.”
