President Irfaan Ali said that his government’s flagship gas-to-energy project was not highlighted at his Tuesday 5:30 am meeting with officials over delayed infrastructure projects as it is currently at arbitration but the government is forging ahead with ensuring that electricity tariffs are cut by 50% even before the project’s turn-on date.
“The gas to shore is a major project that has many moving parts. There are some issues that are at arbitration because of implementation. …I don’t want to explore here all the challenges and missed opportunities, because as I said many of those issues are at arbitration and whatever I say can influence or not influence that process,” the President said when asked by Stabroek News why no one from the delayed project was at the Tuesday meeting.
Speaking on a new interview programme last week, he said that the project is integral to many of the developmental plans his government has for the country and that the planned 50% electricity tariff reduction to consumers will take effect even before the project is completed.
“I have made it very clear that long before the end of next year, the cost of electricity bills be slashed by half and they are already working …already looking at many different contingencies; many different plans, many different approaches through which to improve the efficiency, deliver and reduce the cost. Many things we are evaluating…,” he said.
“While we are pursuing this project and we want the power plant to be completed, we understand that you also have to look at contingency efforts. And we are part of a global mix now where new ideas and opportunities are brought to us every day,” he added.
The President said that his government is taking a multipronged approach as it seeks to maximize the exploitation of the oil and gas sector. “One of the most important things on our list is… I believe that we have to find the fastest way to monetize our gas because it’s the monetization of the gas that will allow us to create the industries and expand the economy, opening up opportunities for new SMEs (Small and Medium-sized Enterpris-es),” he explained.
Government moved to arbitration on the gas to energy project contractor LNDCH4 as the company seeks US$50 million it believes it is owed because of having to start the project late.
In that process, the government is adamant in giving the company only a three-month extension instead of the US$50 million it seeks and a longer delay. It also put LNDCH4 on notice that it will be charged stiff liquidated damages if it loses.
“There is a delay, now because the site was handed over late… we said what we believe is justified is a three-month extension to the contract. We offered that. The company doesn’t want that. They want more money… they want a bit more money and they want a longer extension. They’ve asked for a longer extension.” Vice President Bharrat Jagdeo had said.
“We have an arbitration now taking place and if we win the arbitration, they would have only by April to deliver this project. They have given a schedule which shows [project delivery] later in the year – that is what Winston Brassington spoke of – but I did not want the public to think that we agreed to their schedule. We have only given approval for a three-month extension. So, if we win the arbitration and we stick with that schedule then there would be liquidated damages,” he added.
Jagdeo calculated the liquidated damages at US$11 million-plus monthly, explaining that from whenever the ruling date for an extension, if any, to the company, the government will begin instituting the daily penalty.
Enabling works
When ExxonMobil’s Country President Alistair Routledge had been asked about the delay and the cause, he said, “So let me start where you did, on what we called early enabling works. So, it was very apparent for any of these projects, it’s a multi-year effort to implement these kinds of major infrastructure projects. And so, in the early days of working out who would execute which portions of work, it was agreed that ExxonMobil on behalf of Stabroek would execute what we call those early enabling works. So, clearing the 100 acres of site at Wales where the plant will be constructed, clearing the ground, beginning to bring in the sand in order to stabilise the ground for construction, building a heavy-haul road and materials offloading facility, and improving the access road on the West Bank. So, you can now drive all the way down from the river crossing. So, it was agreed that we would do that, in order that then, that would not have to be included in the scope of in this case that ultimately became LINDSAYCA/CH4.
“So, they did not have to start by doing that work, it was already started and being executed by us, by the time they were awarded the contract. So that initiative has actually saved a lot of time on the front end of the project by getting the early enabling works done by us, versus some of the early dates that were looked at. There were some delays of sand barges and other equipment, but those were pretty minimal. And the reality is, our view and the government’s view, is that it didn’t actually impact the progress of LINDSAYCA/CH4 for their early stage of the project was engineering design, procurement and those kinds of activities. So, it’s not unusual, mentioned earlier on with an arbitration case, that these sorts of issues will be raised as a way to try and make a case. But in reality, our view is that it didn’t delay access to the site for LINDSAYCA/CH4.”
Questioned if his company was wrongfully blamed, Routledge responded, “No, I would say it is accurate to say that it wasn’t the same delivery date that was anticipated for the handover, but that there’s no material impact.”
Further, he posited, “I think that’s the important thing to recognise. We were all committed at the end of the day to ensuring that this project comes on stream as soon as possible, recognise the value it’s going to have to people in the country, reducing our power bills in half; I mean who wouldn’t like to see electricity bills reduced in half and to have an improved reliability of power generation. So, that’s what we are focused on, it’s ensuring that we get to that point as quickly as possible.”
Project Lead, Winston Brassington, had in September made a presentation to an American Chamber of Commerce Guyana event at the Marriott Hotel and disclosed that civil works had seen the project delayed but both parties had agreed the project will be completed by the second half of next year.
This newspaper reported from that presentation which was shared by the Department of Public Information.
Brassington noted that the project delays were due mainly to soil stabilisation works which took longer than anticipated. “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,” he added.
Some 1.65 million cubic metres (m3) of sand had to be brought in for soil stabilisation. In addition to the sand, he said that 160,000 m3 of loam and 25,000 m3 of crusher run had to be used for the stabilisation exercise, Brassington had disclosed.
“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.
Brassington in a subsequent press release stated, “The presentation made clear that the Integrated Power Plant/NGL plant project is late with the current projected completion being H2-2025. What was not discussed in the presentation is that certain disputes are before the DAAB (Dispute Avoidance/Adjudication Board) Tribunal.”
