-must show experience of at least five similar facilities, state expected profit margin or fees
Prime Minister Mark Phillips has stated that government’s search for an operator/manager for the Wales Gas-to-Energy (GtE) power plant and separately seeking investors for a mirror project is evidence of strategic planning for the country’s energy needs which it sees increasing rapidly over the coming years.
In preparation for the 300 megawatt (MW)Wales GtE plant’s scheduled completion in March, government has advertised for a company that will operate and maintain it, even as it seeks investors for a mirror project that will generate 250MW more. The O&M [operations and maintenance programme], however, does not include the natural gas liquid (NGL) fractionation plant that will extract liquids “C3,C4, C5+” as this “will be addressed separately.”
“It is two different RFPs [Request for Proposal] for two different purposes or projects,” Phillips last week told the Sunday Stabroek when asked about the two advertisements which fall under his office – one for the Operations and Maintenance company for the 300MW GtE plant and one for qualified firms to design, finance and operate another plant termed Phase 11 of GtE Project for which the company will also get a 20 to 25 year power purchasing agreement with this country.
“One is for the O&M and the other is for them to design fund and operate Phase 11… in other words, you are finishing one project but you are already forecasting. The forecast is that Guyana will be growing exponentially and because of the growing demands, you have to look to the future, hence all of what you see there [in the RFPs],” he added.
The Prime Minister who holds the portfolio for energy, said that the operations and maintenance RFP outlines definitively what the scope of works is, while the RFP for Phase 11 gives an overview of what government wants but will evaluate and choose the best proposal based on what the respective company outlines it can do.
“They will have to go through, evaluate the proposals and all of that…,” he said while pointing to the notice which said the RFP shall incorporate all that government set out “and additional details.” “All questions will be answered based on the proposals received,” Phillips said.
Hopes to secure
Two weeks ago, project lead for the Wales, West Bank Demerara GtE project, Winston Brassington had told an AMCHAM Guyana [American Chamber of Commerce Guyana] forum that expectations for the commercial startup of the power plant using lean gas from the power plant in the second half of 2025 is still on as projected. In addition it is expected that the combined cycle would be completed by the end of next year.
The project lead also announced that government has added another phase to the project, given that it has realised that the 300 megawatts (MW) of power would not be enough.
“You will see in the papers tomorrow, an advertisement for phase two of the gas to energy project. Already at 300MW, we are projecting that we are going max that out by 2027. We will need more power. The pipeline that is being built has the capacity to handle up 125cf of gas. Our commitment from Exxon is 50cf. The government hopes to secure additional gas to build a second phase power plant.”
He pointed to lands set aside for “future developments” and “downstream activities. “Being a fertiliser plant or whatever. We will need to build additional storage for the liquids.” He noted that the project delays are due mainly to soil stabilisation works which took longer than anticipated. “The soil stabilisation has taken a lot longer. It has been a very technical process. So the civil schedule is what is driving, a very critical part, the other items are a little behind but not as much as the civil schedule,” Brassington explained.
“But all of this being said, the parties have agreed that sometime in the second half of next year, I don’t want to be precise right now because there are a number of moving parts, but we believe that this will be achieved,” he added.
Government advertised for the RFP which it calls Phase 11 of the GtE project, saying it is on the basis of a 20 to 25 year Power Purchase Agreement (PPA).
And like what Brassington had pointed out, the RFP stated that government was securing from ExxonMobil, additional gas to full the 12-inch pipelines which is estimated to be 75 million standard cubic feet per day (MMcf/d) of “rich gas”.
Phase 1’s 50 MMcf/d, the RFP highlights, works out to just 40% of the capacity of the pipe and thus Phase 11’s projected 75 million MMcf/d will make use of the remaining 60% pipeline capacity.
Details for the Integrated Power Plant and NGL facility, were listed as: 1. Design, construction, and operation of a 250 MW combined-cycle power plant, to deliver 2,100 barrels per day of NGL products (propone, butane, and CS+ gaseous), utilizing 75 MMcf/d of “rich gas.”
2. Transfer to the Government of Guyana (GoG), at no cost, excess “lean gas”, estimated at 30 MMcf/d, for utilisation in downstream industries, e g. fertilizes production, to be located at Wales.
Phase II‘s location will be “on no more than 100 acres of land, immediately adjacent to the existing 300 MW Integrated facility.”
Private sector
“The project will be owned and financed 100% by the private sector, under a project finance structure, which will design and construct the integrated facilities, to a standard and specification that meets and or exceeds that of Phase I of the GTE.”
The RFP stated that only firms (consortia) adjudged to be experienced in Engineering, Procurement, and Construction (EPC) and financing of comparable facilities, will be evaluated.
Government stated too that it shall have the right to approve the EPC contract and appoint an independent supervision firm, to ensure that the project is built per the EPC contract and acceptable quality and specifications, pre-approved by the GoG.
To investors, government said that they “will recover their investment from (i) the sale of electricity via a 20-to-25-ycar term (negotiable) PPA at a price per KWH; (ii) monetization of the NGL’s. At the end of the PPA term, the entire facility will revert to the GoG at no cost. Phase II GTE will enjoy the same fiscal incentives as Phase 1.”
It is unclear what those fiscal incentives are, as a complete financial breakdown of the more than US$2 billion GtE project has not been made available.
Responses to the RFP, must also include financial projections of revenue, expenses, and investment returns using the components (a) PPA price per KWH, broken down into three elements: (a) payment for the gas (b) operating and maintenance cost (c) financing/amortization of the capital costs. They have to also indicate the breakeven price and estimated sale price for each year along with an assumed inflation rate, expected revenue from the sale of NGLs (propane, butane, and CS+), and operating and maintenance cost of the NGL Plant.
O&M
Meanwhile, when it comes to O&M of the 300MW power plant, government says that the interested parties must have O&M experience of at least five combined cycle power plants, comparable to that being, constructed in Guyana.
Government made clear that that the gas that will be delivered to the facility from the offshore Stabroek Block to the integrated plant is operated by others [ExxonMobil].
Firms must also have a strong health, safety, and environment (HSE) culture and demonstrate capabilities in workforce training. Particularly focusing on local content, use of advanced technology for efficient operations and safety monitoring and the financial capacity to manage large-scale operations. Only firms (consortia) experienced in operation and maintenance of comparable facilities will be ranked.
They have to also provide a list of relevant experience and reference projects, past and current, with similar operations over the last 15 years, audited financial statements or other evidence of financial strength, and provide a template of a contract from an ongoing or similar O&M project.
The interested firms must also submit O&M fee structures from comparable projects, costs for the power plant (PP) and balance of plant (BOP), if based on (a) 5-ycar contract (b) 10-ycar contract (c) 15-year contract (d) 20-ycar contract. Provide a template of projected O&M costs over each period in S value and on a unit cost/kWh, state expected profit margins or fees, state projected guarantees for availability and efficiency; submit Division of Responsibility (DOR) showing the responsibility and costs borne by the O&M Operator and the Owner and list major vendors and contractors/sub-contractors anticipated as part of the O&M contract.
The firms have to also submit a proposed schedule to conclude the contract and mobilise teams along with an organisational chart (separating local versus foreign staff) and ramp-up assuming startup mid-2025.
“The RFP shall incorporate all the above and additional details. The GOG may convene discussions during the RFP period for registered parties to gain additional clarification on key terms or proposals. Interested parties should submit all questions by email as clearly as possible to allow for sufficient time to address within the RFP period. Negotiations will take place with the highest ranked technical proposal with the objective of concluding an O&M contract,” the RFP stated. .
“Interested companies shall bear all costs associated with their response to this Request for Proposals (RFP),” it added.
