Gas-to-Energy project: Govt, US-based contractor agree to arbitration on US$50M dispute

…VP says process could be lengthy even as work resumes onsite

The Guyana Government and the contractor for the Gas-to-Energy (GtE) Project, Lindsayca/CH4 (LNDCH4) have both agreed to go to full arbitration over financial claims and deadline extensions being sought by the contractor.
LNDCH4, a consortium of two United States-based companies, was awarded the US$759 million contract in November 2022 to build the 300-megawatt (MW) Combined Cycle Power Plant and a Natural Gas Liquids (NGL) facility at Wales, West Bank Demerara (WBD) – key components of the GtE Project.
However, due to the late handing over other aspects that affected its work, the contractor had filed financial claims to the tune of US$50 million and sought a six-month extension to the deadline over the delays – both of which were rejected by the Guyana Government thus leading to a dispute resolution process that was activated. Following submissions and hearings, the Dispute Avoidance and Adjudication Board (DAAB) had given the two parties, in January, a 28-day period to decide whether to pursue arbitration.
On Thursday, the Guyana Government said in a statement that “On February 27 – within that timeframe – each party served a Notice of Dissatisfaction on the other, thereby signaling its intention to initiate arbitration.”
It was noted that the arbitration will be administered by the International Chamber of Commerce (ICC), with Washington, D.C. selected as the venue. According to the government, pursuant to the International Federation of Consulting Engineers’ (FIDIC’s) DAAB procedures, all DAAB decisions in this matter are confidential.
Notwithstanding the disputes, both the Guyana Government and LNDCH4 recognise the strategic importance of the GtE project to the Guyanese economy and works have since resumed onsite.
Speaking on the issue at his weekly press conference on Thursday afternoon, Vice President Dr Bharrat Jagdeo explained that this arbitration process could be lengthy.
“Both sides decided to go to arbitration… and so the timeline for arbitration can’t be determined by us but it may be an extended period. [But] they have resumed work now… So, there is resumption of work and we’re happy about that whilst we arbitrating the differences,” Jagdeo stated.
The Vice President went onto explain that a part from the financial claim and deadline extension, there were some additional claims made by the contractor including delays in the completion of the access road to the project site.
Moreover, when asked about the deadline for the completion of the GtE project, Jagdeo said “It’s premature for me to say that and whatever we say here could influence the arbitration because remember, they had asked for additional time. If we start acknowledging their timeline, as Government, then we may very well be harming our own case in the arbitration. So, people have to understand the nuances of doing that. We don’t want to bolster their case.”
Previously, the Guyana Government had said that the contractor is expected to start operating the power plant by April 2025. However, during the recently concluded Guyana Energy Conference and Supply Chain Expo held in Georgetown last month, Project Lead Winston Brassington had stated during a presentation on the GtE initiative that there are some delays.”
“[The integrated facility] is scheduled to be delivered in the second half of this year but we have seen a schedule that suggests it will take longer. Contractually, this year; realistically, we are looking at some delays,” Brassington had stated.
Meanwhile, LNDCH4 have also filed a second US$50 million financial claim as compensation for additional works that had to be done to stabilize the soil at the project site. VP Jagdeo opted not to comment on this matter, explaining “I can’t provide more… We have to comply with an international process.”
Nevertheless, as activities including pile-driving resume at the GtE project site at Wales, preparations for foundation work are also imminent. It was noted too that construction of a cement batching plant is underway, steel for foundation work has been delivered to the site, and a man-camp is being established with more than 170 workers currently mobilised.
Upon completion, the project is expected to substantially lower electricity generation costs, enabling Guyana Power and Light Inc. (GPL) to reduce tariffs by up to 50 per cent. This reduction has significant implications for the Guyanese economy, fostering more competitive production costs and stimulating broader economic growth.
ExxonMobil Guyana Limited (EMGL) has already finished constructing the gas pipeline, and the transmission lines and substations required for integration of the project are significantly advanced, with completion anticipated by mid-year.
According to the government’s missive on Thursday, “Despite the pending arbitration, both parties remain committed to expediting the power plant and natural gas liquids (NGL) plant, aiming to ensure the timely relocation of the gas and steam turbines, which are already in Guyana, to the Wales site.”