Govt/LNDCH4 dispute on GtE project: Submissions made, hearing likely before year end

The Guyana Government and the contractor for the Gas-to-Energy (GtE) project, Lindsayca CH4 Guyana Inc. (LNDCH4-Guyana), have both made submissions to the three-member arbitration panel that was selected to resolve the ongoing US$50 million dispute regarding the timelines for the highly-anticipated energy project.

This was revealed by a senior government official, who is close to the proceedings. He explained to the Guyana Times on Wednesday that the team was here several weeks ago to conduct a site visit at Wales, West Bank Demerara, where the 300-megawatt Combined Cycle Power Plant and a Natural Gas Liquids (NGL) facility – key components of the GtE project – are under construction.
Since that visit, the official said both the Government and the contractor have made their respective submissions to the arbitration panel.
The next step forward is for a hearing to be held and that, he added, is likely to be done before the end of this year. The official further told this newspaper this matter is expected to be resolved in the first quarter of 2025.
The Government and LNDCH4-Guyana are at loggerheads over the timelines of the project and associated costs. The Joint Venture formed by United States-based companies, Lindsayca and CH4, was awarded the US$759 million contract in November 2022 to build the 300-megawatt power plant and NGL facility at Wales, West Bank Demerara (WBD).
However, 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. The Guyana Government has already rejected this financial claim thus resulting in the contractor activating a dispute resolution mechanism through a ‘Dispute Adjudication and Arbitration Board.’
The three-member Dispute Avoidance/Adjudication Board (DAAB) was subsequently set up to mediate between the Guyana Government and the JV company and at the end of this process, if either party is not satisfied with the outcome, then they can ask for a full arbitration.
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 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 were three-month delays 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.
Only recently, Vice President Dr Bharrat Jagdeo 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.
Only last week, the Vice President disclosed that the Board of the US EXIM (Export-Import) Bank has pre-approved a loan of over US$500 million loan for the GtE project. The funding is currently before the US Congress for feedback before it is returned to the EXIM Bank Board for final approval.