Government and Gas-to-Energy (GtE) project contractor CH4/Lindsayca have agreed on the third member of the Arbitration Board that will settle the current US$50 million dispute, a source close to the project said, and this now paves the way for the process to begin.
Up to late May, the two sides had been in discussions on who the third arbiter would be and they have now come to an agreement, the source explained.
Contacted for comment, Project Lead Winston Brassington said that he could not give an update on the project or arbitration process unless given the go ahead by the government. Vice President Bharrat Jagdeo had told this newspaper to contact Brassignton on updates regarding the project but it seems Brassignton was not made aware of this.
The government has made it clear that the adjudication process will not affect the continuation of works at the Wales, West Bank Demerara site.
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 news agency 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 claim lacked merit. “It is US$50 million, not US$90 million…,” Jagdeo had 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 per cent.
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 was 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] 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.
The GtE project is divided into three components – 1) Pipeline, 2) Power/NGL Plant, and 3) 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 [natural gas liquids] component is the 300 MW Combined Cycle and NGL Plant, while the third component will have 85 kilometres of 69 KV and 230 KV transmission lines, 3 new substations, and upgrades to two 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 the government’s completion of the integrated plant.
