$24.6B spent thus far on Gas-to-energy project – PM tells National Assembly

– says $400M for acquisition of private lands for pipeline

The People’s Progressive Party/Civic (PPP/C) Government has set aside some $400 million for the acquisition of private lands to facilitate the laying of pipelines for its model Gas-to-shore project.
According to Prime Minister, Brigadier (Ret’d) Mark Phillips, whose Office is responsible for the country’s energy sector, this sum is part of the $24.6 billion that has already been injected into the start-up of the transformational project, which includes the construction of an integrated Natural Gas Liquid (NGL) plant and the 300-megawatt (MW) combined cycle power plant at Wales on the West Bank of Demerara (WBD).

The Prime Minister was at the time fielding questions from Opposition Members of Parliament on Thursday during the National Assembly’s consideration of Financial Paper No. 4 of 2022, which contains advances made from the Contingency Fund to the tune of totaling $3.8 billion for the period November 30 to December 31, 2022.
Since the supplementary funds were earmarked for the gas-to-shore initiative, Opposition MP Ganesh Mahipaul asked for an update on the project.
PM Phillips disclosed that 15 per cent of the Engineering Procurement and Construction (EPC) contract, which was awarded to US companies CH4 and Lindsayca in late 2022, has been paid to the tune of $24.213 billion. The total cost of the EPC contract is US$759.8 million.
He added that an additional $400 million was given to the Public Works Ministry to pay those persons whose lands are in the path of the pipeline route.
“The amount of $400 million represents the sum that is more than double the fare-market value that was determined by the Chief Valuation Office. As such, persons are being compensated for no less than the valuation for the land… That amounts to [total] payments made so far of $24.612 billion,” the Prime Minister indicated.
He was further questioned as to how many landowners were engaged and how much of $400 million was spent.
In response, Phillips said all the landowners were involved in this acquisition process and further indicated that a comprehensive report will be provided on the project, outlining all the information being requested by the Opposition.
“We are committed to transparency and the report will be submitted in due course… The report will have all the information including the money paid for the acquisition of the land, the names of the people, the date when they sign for the cheque – everything will be in the report,” the PM stated in response to the barrage of questions on the project.
In addition to the $24.6 billion already spent, another whopping $43.3 billion has been allocated in Budget 2023 for the project, which is expected to directly cut carbon emissions by 70 per cent as well as reduce electricity costs by some 50 per cent thus triggering a series of major economic development initiatives in Guyana.
Only last month, PM Phillips disclosed that Government will be funding the NGL and 300 MW power plant components of the project by use of State funds and loans.
This was detailed in written answers submitted to the National Assembly by Phillips, who was responding to questions raised by Opposition MP, Volda Lawrence.
In her questions for written replies, Lawrence asked for details on the cost of the Gas-to-Shore pipeline. Phillips explained in his response that the pipeline, supporting works, and supervision for the pipeline, will cost US$1 billion.
This is being funded entirely by ExxonMobil, through cost oil. Some 225 kilometres of the pipeline will run from the Liza field in the Stabroek Block offshore and will land onshore in Region Three.
“The Government is sourcing the funding of the EPC costs from the proceeds of the National Budget over a multi-year period from 2022 to 2025. An early estimate was included in the 2022 capital budget, this figure will be revised in the 2023 budget in line with the above sum. The Government expects to fund a portion of the EPC contract from loan financing to be pursued in 2023,” the PM explained.
Meanwhile, the PM was also asked if the Government would be held liable should Exxon be unable to repay its loan for the pipeline. The PM assured that no contingency liability is likely and that the Government will make annual payments to Exxon subsidiary Esso Exploration and Production Guyana Limited (EEPGL).
“When the project is completed, Government will make an annual payment to EEPGL co-venturers over a 20-year period to recover the cost of their investment in the pipeline used to deliver a minimum of 50 million cubic feet of gas per day to Wales.”
“The total cost of electricity exiting the power plant which includes the payment to EEPGL co-venturers, operating costs of the power plant/NGL plant, and recovery of capital costs, shall be less than US 5 cents per kWh,” the Prime Minister also said.
With a timetable to deliver rich gas by the end of 2024 and the NGL plant to be online by 2025, works are progressing on getting the Gas-to-Shore Project off the ground. When it comes to the construction of a combined cycle power plant, a net total of 250 MW is expected to be delivered into the Guyana Power and Light Grid at a substation located on the East Bank of the Demerara River.
In addition to the US$759.8 million EPC contract, the supervision of the NGL and 300 MW power plant components of the project will cost another US$23 million.
Only last month, Guyana signed a contract with an Indian company, Engineers India Limited (EIL), to provide consultancy services for the NGL Plant and the 300-megawatt Power Plant.