Vice President, Dr. Bharrat Jagdeo disclosed today that the Engineering, Procurement, and Construction (EPC) contract for the 300 megawatts (MW) combined cycle power plant and Natural Gas Liquids (NGL) facility for the gas-to-energy project has been finalized.
He told members of the media that the US-based partnership CH4/Lindsayca had produced a US$898M bid. Following negotiations, Jagdeo said it was found that there were a number of unnecessary manufacturing provisions that the company included. Once those were removed and the bid amended in keeping with the original scope of the contract, the price was confirmed at US$759M. Jagdeo was keen to note that the administration utilized world-renowned engineering and consulting giants, Stantec and Worley, during the negotiations.
Furthermore, the Vice President said Engineers India Limited will supervise the works for the onshore plant facilities to be landed at the Wales Development site.
Jagdeo also stressed that the project is scheduled to come on stream in December 2024, adding that there are huge penalties for any delays.
“We are pleased that we wrapped up the mobilization for this project so that it could be paid…this project can transform Guyana in terms of stable power and lower electricity costs. It will allow us to reduce costs by 50 percent in two years. We will also move from being an importer of cooking gas to being an exporter,” expressed the Vice President.
Guyana Standard previously reported that the NGL facility and gas-powered plant would be connected to a pipeline that receives gas from the Liza Destiny and Liza Unity floating, production, storage and offloading (FPSO) vessels. That pipeline is being constructed by ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL). The subsidiary had said the pipeline would cost US$1.3B but could be higher once critical contracts are finalized. Added to the finalized EPC contract, the total cost for the gas-to-energy project is roughly US$2B.
At a previous press conference, the Vice President had said that the project is not likely to surpass US$1B. In light of such a vast jump in projections, he was asked by the media to confirm that electricity rates can still be slashed by 50 percent. The Vice President answered in the affirmative, as he noted that these increases were catered for in assimilations that were done for the project.
The Vice President also clarified that while the pipeline expenses are being handled from cost oil, the costs for the onshore facilities will be handled through a blended financing arrangement.
He reminded that in this year’s budget there is about US$20B for the first payment to CH4/Lindsayca. (https://www.guyanastandard.com/2022/01/26/budget-2022-20-8b-allocated-for-gas-to-energy-project-solar-farms/)
The Vice President said further funding will be mobilized from a loan, possibly from the US Exim Bank. He said too that the sale of liquids from the NGL plant could bring in US$100M annually. The Vice President said this will be used to cover some of the repayment costs for the onshore infrastructure.