Gas-to-Energy Project: Power plant to start supplying national grid by April 2025 – VP

…says contractor could face liquidated damages if Govt wins arbitration

The contractor for the model Gas-to-Energy (GtE) Project, Lindsayca CH4 Guyana Inc (LNDCH4) is expected to deliver power to the national grid by April 2025 and failure to do so could result in it having to pay hefty sums in liquidated damages if the Guyana Government wins the ongoing arbitration.
LNDCH4 was awarded the US$759 million contract in December 2022 to build the Natural Gas Liquids (NGL) facility and the 300-megawatt (MW) combined cycle power plant at Wales, West Coast Demerara (WCD), that will utilise the rich gas that will be piped from offshore Guyana. Initially, the deadline to deliver the power was this year end, but owing to delays in handing over other aspects of the project, the contractor was given a three-month extension.
Consequently, LNDCH4 and the Guyana Government are currently in a dispute over the deadline and associated costs, resulting in an arbitration process being activated.
But Vice President Bharrat Jagdeo believes that the three-month extension is justified and this is the basis of the Government’s arguments in the arbitration process. Already, a three-member panel has been established to resolve the dispute.

“We offered that [three-month extension but] the company doesn’t want that… They’ve asked for a longer extension… [But] we believe that the delay in handing over the site …will justify just a three-month extension and that’s what we’re arguing for in the arbitration. Therefore, power should be supplied to the grid from that project by April of 2025,” Jagdeo explained at a press conference on Thursday.
He was at the time clarifying recent reports that the completion of the GtE Project was delayed to the second half of next year due to some setbacks with the civil works, including soil stabilisation at the site. In fact, GtE Project Lead Winston Brassington said during a recent presentation at the American Chamber of Commerce Guyana (AmCham Guyana) Energy Mixer held last week that “…the parties have all agreed that sometime in the second half of next year [the project will be completed].”
While the Government has given a three-month extension, LNDCH4 was initially pushing for a six-month extension over the delays which stemmed from ExxonMobil’s sub-contractor, Guyana Shore Base Inc (GYSBI), being late in completion of site work on the 100-acre site by three months, and GAICO being late with respect to completion of the Material Offloading Facility (MOF) by another three months.
However, LNDCH4 has submitted a new timeline schedule that pushes the delivery of the power plant to October 2025. In addition to the extension, the contractor is also making financial claims to the tune of US$50 million, stating that the delays would cost the company.
But Jagdeo clarified that the Government has not agreed to that new timeline set out by the contractor, warning that any delays in delivering power to the national grid would result in liquidated damages to the tune of US$11.3 million per month.
“We have an arbitration now taking place and if we win the arbitration, they would have only by April [next year] to deliver this project. They have given a schedule which shows [a delivery date] later in the year… But I did not want the public to think that we agreed to their schedule. We have only approved a three-month extension. So, if we win the arbitration and we stick with that schedule, then there would be liquidating damages at US$11 million per month… So, for every month delayed, the contractor will have to pay liquidating damages of US$11 million,” the VP contended.
The GtE Project consists of five key components: laying the pipeline to bring the gas onshore, construction of the power plant and NGL facility, installing transmission lines, building a new control centre, and upgrading the aged power distribution system.
Despite key components of the project being behind schedule, Brassington had reported that the GtE initiative is on budget.
Back in April 2023, Guyana approached US EXIM Bank for a US$761 million loan to finance the GtE Project. Earlier this month, Vice President Jagdeo disclosed that the Bank was preparing to submit a report to its Board at a meeting in October. This was after the technical and environmental due diligence work was done by the US EXIM Bank, which had sent experts to Guyana for these assessments.
But even as Guyana awaits the approval of this loan, the Government has already spent some US$400 million on the GtE Project and could potentially fund the entire initiative if the request from the US EXIM Bank is not approved.
It was explained that the aim was to borrow approximately US$650 million from the US Bank to fund the GtE initiative, while the Guyana Government was expected to put up the other US$100 million, as advanced payment, to support the initiative.
However, VP Jagdeo had previously explained that the loan can fund retroactive expenditure hence government could use bridge financing to get the works going. Bridge financing is a short-term financing option to fund a project before the financing is expected. (G8)