Govt/LNDCH4 dispute on GtE Project: Contractor seeking compensation for additional stabilisation work in 2nd claim

Contractor for the highly-anticipated Gas-to-Energy (GtE) Project, Lindsayca CH4 Guyana Inc (LNDCH4 Guyana), is looking for financial compensation for additional works that had to be done to stabilise the project site.
The Joint Venture formed by United States (US)-based companies, Lindsayca and CH4, 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, General Manager (GM) of LNDCH4 Guyana, Humberto Lopez, told reporters during a tour on Friday that when they received the prepared construction site, it was not to the specified stabilisation requirement and they had to undertake that addition work. In fact, at the project site, there were huge mounds of sand.
“That sand, we use to stabilise the site… We had initial site conditions that we had to reach. So, [to reach] that site condition, we had to do it… We had to bring a huge amount of sand just to prepare the site to start doing the job,” Lopez explained.
It was previously reported that LNDCH4 Guyana has filed claims over these additional soil stabilisation works that they had to do.

According to the GM, the claim, which is to the tune some US$50 million, is “…for extra job that we had to do to prepare the land.”
Only last month, Vice President Dr Bharrat Jagdeo confirmed that GtE had a claim relating to the soil condition. However, he noted that those claims would have to go through a technical process to determine whether they are justified or not.
“I don’t want to comment on those because those matters could end up in arbitration. [But it] has to go through a technical process when they submit their claims… We have an engineering company that oversees the contract and they would have to give their views on the claim – whether it merits addressing or not,” VP Jagdeo stated during a December 27 press conference.

Extra stabilisation
Meanwhile, Lopez explained that this claim for the extra stabilisation work was filed alongside another US$50 million claim that LNDCH4 Guyana has made. The Guyana Government and the GtE contractor are already at loggerheads over that initial claim by the company and the timeline for the completion of the project.
There was a three-month delay in other components of the project that would affect LNDCH4-Guyana’s delivery of the power plant in accordance with the contractual timelines. While the Government has extended the deadline by three months, the contractor is not satisfied and wants more time.
In addition, LNDCH4-Guyana is making financial claims to the tune of US$50 million, stating that the delays would cost the company millions in liquidated damages. The Guyana Government has already rejected this financial claim thus resulting in the contractor activating a dispute resolution mechanism.
This resulted in the establishment of a Dispute Avoidance/Adjudication Board (DAAB) to settle the matter between the two sides.

According to VP Jagdeo, the parties have already made oral and written submissions to the three-member panel at a recent hearing.
“They [first] had to make written submissions to the DAAB. Then they had in Miami, the presentations by our lawyers and [now] they have, I think, the 15th of January to make some supplementary presentations,” Jagdeo had disclosed, adding that a ruling could be made later this month.
“I think by the end of [this] month, they will rule on the matter. So, if the parties accept that, their claims can be settled – if they accept the ruling. If the parties decide not to [accept the ruling] then you go to full arbitration,” he stated.
The People’s Progressive Party/Civic (PPP/C) Administration’s flagship GtE initiative is divided into five components: the pipeline from offshore production activities to Wales, then the building of power plant and NGL facilities, the transmission main to move power generated at the power plant, a new control centre at Eccles, East Bank Demerara (EBD) and upgrading the national power grid.
While LNDCH4-Guyana was given the contract to build the two plants, the procurement and installation of the 225-km gas pipeline from the Wales project site to the offshore oil field is being executed by US oil major ExxonMobil Guyana, which is carrying out production activities in the Stabroek Block.
The installation of the US$1 billion pipeline also includes the upgrade of the roads to get to the site at Wales, the Material Offloading Facility (MOF) and site preparation for 100 acres as well as a lay-down yard – all undertaken by Exxon and subcontracted out. However, there was a three-month delay in the handing over of two of these components to LNDCH4-Guyana for them to start their work.
Based on the contract, LNDCH4-Guyana is required to deliver 228 MW of power with four gas turbines coming on stream at the end of 2024 at 57 MW each. To get the entire 300 MW, another two steam turbines are expected by the end of 2025. However, the contractor wants to deliver the gas turbines until August 2025.

VP warns
The Vice President had already warned that if the Government wins the arbitration, then there would be liquidated damages if the contractor does not meet the April 2025 deadline to start delivering power.
“There is a delay, now because the site was handed over late… We said what we believe is justified is a three-month extension to the contract. We offered that. The company doesn’t want that. They want more money… They’ve asked for a longer extension,” Jagdeo told reporters at a press conference back in September.
He added, “We have an arbitration now taking place and if we win the arbitration, they would have only by April to deliver this project. They have given a schedule which shows [project delivery] later in the year… We have only approved a three-month extension. So, if we win the arbitration and we stick with that schedule then there would be liquidated damages.”
But even as efforts are being taken to resolve this dispute, the Guyana Government has maintained that this issue would not impact the project and that work continue on the ground.
In fact, only Friday, Government signed a US$527 million loan agreement with the US EXIM (Export-Import) Bank to finance the highly anticipated GtE Project, which will not only increase the country’s generation capacity with reliable power but also see electricity prices slashed by half. (G8)