With the construction of the US$759M Power Plant and Natural Gas Liquids (NGL) Plant at Wales facing considerable delays, Opposition Member of Parliament, David Patterson, is concerned that Guyana could find itself paying ExxonMobil millions of US dollars for a pipeline long before benefiting from the Gas-to-Energy Project. 

ExxonMobil is currently building the gas pipeline to the tune of US$1 Billion under the condition that Government will reimburse it US$55 Million a year over a 20-year-period, at a fixed price with no adjustments.

That component of the Gas-to-Energy project, according to Exxon, is on schedule to be completed by December 2024, however, the Power Plant and Natural Gas Liquids (NGL) Plant will not be completed until December 2025 due to a number of delays.  

In an interview with News Source today, MP Patterson said the delays in the project are worrying, and could cost Guyana more in the long run.

“Exxon at the moment has claimed and we have no reason to doubt their claim, is that they will finish bringing their gas pipeline in onshore at the end of 2024, and so you will have a pipeline to nowhere for a year. Who is paying for that? What are the implications for the country? What are the environmental implications? You have heard Exxon already saying that they will have to bring down the Liza 1 and Liza 2 FPSOs to hook up this gas pipe to nowhere. Who is paying for that? When is it do we start paying Exxon? Obviously, soon Exxon indicates that they have completed the pipeline, we have to start paying them US$55M for the entire 2025 for no product because they have nowhere to supply it but they would have fulfilled their part of the agreement,” Patterson stated. 

But that is just the tip of the iceberg, MP Patterson said. Two contractors hired by the Government to construct the Power Plant and Natural Gas Liquids (NGL) Plant have filed for arbitration over costs overruns of US$90M. 

CH4 Lindsayca is one of the two contractors seeking arbitration.  In December, 2022, the Government signed a US$759M contract with CH4/Lindsayca for the construction of combined power plant and natural gas liquid plant at Wales. The project includes the construction of a 300-megawatt power plant.

MP Patterson suspects that the additional expense incurred by the contractors outside of the planned budget for the project, is not only as a result of the delays being experienced, but also due to the defects in the design of the project. 

He said the Government failed to conduct adequate due diligence, and is now suffering the consequences.  

“So, they found design flaws, implementation flaws, delay in financing flaws, and works that they have to do but it is not catered for in the contract. So, the government obviously would have to foot that bill,” the Opposition MP said. 

He said this was also the situation with the Cheddi Jagan International Airport project, which was awarded to China Habour Limited in 2011, and later found to have a number of defects. 

Meanwhile, funding for the gas to energy project is turning out to be a challenge for the Government.

The administration is still awaiting information on its request for a US$660M loan from the US Exim Bank to support financing of project.

MP Patterson told News Source that the US EXIM bank may be in no rush to approve the loan until certain benchmarks are met.

“How it is set up, this is the county, United States of America, lending moneys for a project on conditions that they would attach, that contractors from their country get the contractor. But obviously, they also have standards by which you have to permit. Because obviously, the US would not like to lend money to Guyana for a gas plant that explodes. It reflects badly on them, so they want to ensure that the project that they are funding is technically sound, financially sound and economically sound…So, before any moneys can be disbursed to Guyana, we have to meet their minimum benchmark, and we haven’t met those minimum bench marks” he explained. 

Earlier this year, $80 Billion was approved in the national budget to advance infrastructural works on the project.

The project is now expected to be completed by the end of 2025, but Mr. Patterson said that may also be a long shot. (Svetlana Marshall)

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