Gas-to-Energy Project: Jagdeo says ‘no merit’ to cost overrun claims

… assures that full project not delayed


Vice President Dr. Bharrat Jagdeo on Thursday said one component of the forthcoming gas-to-energy project is facing a three-month delay but the entire project is still on track for its end of 2025 deadline.

He added that claims for additional payments being sought by the companies executing the project are without merit.

LINDSAYCA and the CH4 group are executing the contract for the engineering, procurement and construction of the Guyana integrated natural gas liquid plant and a 300-megawatt power plant at Wales on the West Bank of Demerara.

The firms are seeking additional payments due to cost overruns stemming from delays at other components of the project.

Jagdeo, however, noted that the project consultant supervising the project, Engineers India Limited (EIL), assessed the claims and did not believe that additional payments were needed.

“The contractor has made a claim for money, they want additional money, because they are saying this (the delay) is costing them.

“… EIL reviewed the claim and rejected it totally. We have a legal opinion to say it has no merit on the financial claim. When that happens, you have to go to dispute resolution,” Jagdeo explained at his weekly press conference.

Because the two sides cannot agree, the matter has been referred to a dispute adjudication and arbitration board. If either party is not satisfied, the matter may then move to arbitration.

So what are the delays? And how do they affect the total project?

Vice President Dr Bharrat Jagdeo (Photo: News Room/March 14, 2024)

Jagdeo explained that LINDSAYCA and CH4 want more time to install four gas turbines needed as part of the first phase of the project. Once installed, these turbines would provide about 228 megawatts (MW) of power. Those should have been operational by the end of this year but the government is greenlighting a three-month extension until the end of March to April.

The three-month extension is less than the amount of time the LINDSAYCA/ CH4 wants. As it is now, if they do not get the turbines operational by that time, they would have to pay about US$11 million monthly in liquidated damages.

Jagdeo acknowledged that LINDSAYCA/ CH4 were initially delayed by the late completion of other parts of the project including the site preparation work, the Materials Offloading Facility and the laydown yard. He, however, believes that a three-month extension should suffice.

So, that’s why the matter has gone onto a dispute resolution mechanism. Overall though, Jagdeo maintains the highly-anticipated project will be completed by the end of 2025, as originally scheduled.

The complete project- which includes the four gas turbines and two steam turbines- is expected to provide about 300MW of power, using natural gas brought onshore through an ExxonMobil pipeline.

The project also includes a Natural Gas Liquids (NGL) facility, a transmission and distribution network and a modern control centre.

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