Gas-to-Energy Project: Billions in annual savings for Govt, citizens – Head of State

…will reduce poverty, improve quality of life

The landmark gas-to-energy project, set to come on stream in a matter of years, is not just about slashing the costs for electricity and cooking gas, but it will drastically improve the quality of life of Guyanese, and contribute tremendously to the reduction of poverty nationwide.

This was the message delivered by President Dr Irfaan Ali at State House on Thursday as he addressed a group of Private Sector officials, members of the diplomatic community, and other stakeholders on the upcoming project, which will be developed at Wales on the West Bank of Demerara (WBD).
“The benefits of this project is not only about electricity and the costs for electricity; that is for those who want to, for different reasons, structure it in a narrow construct. This project is a transformational project that must be structured in the transformational construct, because it is directly linked to all the other sectors…,” he affirmed.

Some 150 acres of land have been allocated for the project, which entails the laying of a 225-kilometre pipeline from the Liza Field offshore. This pipeline is expected to transport a minimum of 50 million cubic feet of natural gas per day initially, with the potential to increase to 120 million.
This project, President Ali expressed, will translate to huge savings at a household level, and for Government.
“We have just over 220,000 households connected to the grid now. The current revenue is about $40B; we cut that in half, it’s $20B. That is $20B in savings for the households of Guyana…$20B that will go back to your pocket…that is $20B of revenue that will now be freed up and made available to be spent in the economy,” the Head of State explained.
He also anticipates that there will also be some $7B in annual savings from cooking gas for households.
Explaining that the current retail price for a 20lb cylinder of cooking gas is $4,500, President Ali noted that “The annual value of the market, as I speak to you now, is Gy$10.1B”, and with the gas-to-energy project, this will be “substantially less”.
The Government will also be saving big, he asserted.
“Every single month, the GPL and the Government will be saving US$11M…foreign currency that is used to pay for fuel,” President Ali further revealed. And with the savings from the Government end, President Ali reasoned, this will “free up” revenues that can be otherwise invested into other sectors.
He contended that, with these savings, Government spending can be directed to “eliminating hunger, working on infrastructure, expediting our plans on education, health and social security”.
In fact, he explained, the gas-to-energy project falls in line with the Government’s transformation agenda, which rests on six other pillars; being infrastructure, technology, services, food security, human transformation, and mental transformation.
Meanwhile, the gas-to-energy project also comprises the establishment of a gas processing plant and a natural gas liquids facility capable of producing at least 3,500 barrels per day, including the separation of liquefied petroleum gas, otherwise known as cooking gas. However, President Ali explained that the total domestic demand is 780 barrels a day.
“All things being equal, we will have an excess of 2,600 barrels available…that is more than 330% of the local demand. The potential that this brings for expansion and opportunity is enormous,” President Ali remarked.
“When we talk about Guyana becoming a player in the regional energy mix and being part of the energy solution of the region, that is what we’re talking about,” he added.
The Guyanese Leader also highlighted that the gas-to-energy project is not just about the energy sector, but has the potential to reduce poverty and improve one’s quality of life.
“More people have access to cheaper energy; some people might decide they can now afford an AC in their room. Some people could decide that they could now invest in a small mill at home to do packaging of juice, to do something,” President Ali explained.
He added, “The project is directly linked to outcomes in relation to poverty reduction, food security, opening up the opportunities for agro-chemicals, fertilisers, and the value chain.”
President Ali further explained that natural gas is far less polluting than fossil fuel, and therefore, the establishment of this facility would contribute to the country’s efforts to fight climate change.
It is expected that the pipeline system of the gas-to-energy project would be completed in 2024, while the NGL facility should become operational by mid-2025.
The project is being undertaken by the Guyana Government in partnership with ExxonMobil’s local affiliate, EEPGL, which would contribute US$1.3B towards the subsea and pipeline network.
Already, nine companies that were prequalified for the project have been invited to submit their proposals for the construction of the project. These are expected to be submitted by September. The goal is to conclude the contracts in the fourth quarter of this year.
The Government also plans to hire a firm to supervise the contract. “Another layer of independent scrutiny, another layer to advance transparency on this project,” Ali expressed.
Once completed, it is projected that the electricity generation costs would be between US¢4 and US¢5 per kilowatt/hour, and this includes paying back for the pipeline, the NGL facility, the powerplant, and operating costs.
“That is quarter what we’re paying now,” Ali highlighted.
In this regard, he pointed out that the gas from the gas-to-energy project “comes to the Government and the people of Guyana free of cost”.
President Ali emphasised that there is nothing to hide about the gas-to-energy project, which he noted has gone through every single test of scrutiny. In this regard, he posited that the initiative would take the country down a prosperous road, and that this “prosperity can only be derailed by our own actions”. (G11)