The three-member Gas-to-Energy (GtE) arbitration team presiding over the US$50 million dispute between the Government of Guyana and project contractors Lindsayca CH4 Guyana Inc (LNDCH4-Guyana), will be conducting a site visit soon, Project Lead Winston Brassington has said.
On Wednesday last, Vice President Bharrat Jagdeo had highlighted that the three-member team had been selected and he was updated that a project visit was due.
Brassington told Stabroek News that while the team was expected to visit, he could not give a definitive date as at Friday August 30, but promised that he will be updating on any progress, once given the go-ahead by the government to speak. He also stated that he could not give the name of the third arbiter.
Up to late May, the two sides had been in discussions on who the third arbiter would be, and earlier this month they came to an agreement, a source had explained.
Unclear still is how long the arbitration process would take and what the team’s scope of work would be.
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 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.
