$13.6M already paid by Guyana for arbitration with Gas-to-Energy contractor- Prime Minister

Nov 29, 2024 News

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Kaieteur News- The Government of Guyana to date has incurred a legal bill of $13.6 million for the arbitration process with the Gas-to-Energy contractor, CH4-Lindsayca.

This was revealed by Prime Minister, Brigadier (ret’d) Mark Phillips on Wednesday during the 89th Sitting of the 12th Parliament.

Prime Minister (PM) Phillips was at the time responding to questions from Opposition Parliamentarian, David Patterson on an additional sum of $25.3B that was sought by the Office of the Prime Minister to support the project.

On December 13, 2022, the Government of Guyana (GoG) signed a US$759M contract with CH4-Lindsayca to build two Natural Gas Plants at Wales, West Bank Demerara (WBD). The scope of works includes construction of a Natural Gas Liquid (NGL) plant and a 300-megawatt natural gas fire plant.

The Prime Minister told the National Assembly that the additional sum requested does not cater for arbitration costs.

He explained, “This money does not include the sum for the dispute, avoidance and adjudication board. That sum is to date $13.6M.”

The Prime Minister noted that the $13.6M that has been paid to date by the government went towards fees to the consultants and lawyers that are guiding the state on the matter.

It is not clear who are the lawyers and consultants that have been recruited by the government.

In April this year, Reuters first reported that CH4-Lindsayca initiated legal proceedings against the GOG for US$90 million in cost overruns for the project.

Notably, at that time, it was stated that the first phase of the 300-MW power plant was running six months behind schedule and full operation is not expected until the fourth quarter of 2025.

Days later, Vice President Bharrat Jagdeo during his weekly press conference at Freedom House, Georgetown blamed ExxonMobil Guyana Limited (EMGL) for the construction delays in the Wales gas plants.

He explained that the contractor was required to deliver 228 MW of power by the end of 2024. He said, “Four turbines were to come on stream at the end of 2024- 57 MW each. To complete the project in the agreement where the full 300 MW would come on line, that is the combined cycle…the steam turbines should have come on stream by the end of 2025.”

He therefore noted that the completed project was expected to be delivered by the end of 2025. Consequently, he pointed out, “what we have now…the delay we believe is by three months so taking it to end of March- April and the contractor wants to complete the simple cycle turbines, the gas turbines by August but the project timeline has not shifted that is to bring the 300 MW fully on board in 2025.”

Jagdeo said that ExxonMobil was responsible for the site preparation, the road, the Materials Offloading Facility (MOF) and the lay-down yard.

“We were supposed to hand over the site to the contractor by June, 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$14M from the US$1B that they set aside to the contractor to complete the site, so a three months delay,” he said. Guyana Shore Base Inc (GYSBI) was contracted by ExxonMobil to complete the site.

Jagdeo further stated that the government decided to give the contractors an extension of three months (from the end of 2024), “that is why we are arguing that the plant must be completed by April of 2025, instead of end December 2024.” He explained that GAICO, another Guyanese firm was contracted to construct the Materials Offloading Facility (MOF) and was required to hand over the facility to Exxon in July but never did so until October with there still being challenges in that regard.

The former Head of State said the GoG is at odds with the contractor over the delay period. He explained, “That is where the three months we are arguing the three months delay on the project came. They want a longer period because the liquidating damages for not completing the project on time for the contractor, if they don’t complete the project on time it’s over US$11M per month they have to pay in liquidating damages for delay on the project, so they are arguing they need more time beyond the three months. We are saying three months is adequate.”

Jagdeo added that the contractor has now made a claim for additional money since they argue the delay is costing them. The VP noted however, that the independent supervision firm that was hired by the government from India, Engineers India Limited (EIL) has reviewed the claim and rejected it in its entirety. Consequently, the VP said the contractor was required to file for a dispute resolution through an official ‘dispute adjudication and arbitration board’.

In September, it was reported that the arbitration panel was set for US-million-dollar cost overruns claimed by the joint venture against the GoG.

($13.6M already paid by Guyana for arbitration with Gas-to-Energy contractor- Prime Minister)

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• arbitration, cost, GTE, legal, Parliament, Prime Minister

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