US$800M Gas-to-shore project: Where did Jagdeo get his figures without a feasibility study?

Mar 29, 2021 News

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…Guyanese must be concerned – ANUG Executive

Kaieteur News – The construction of a gas-to-shore power plant without undertaking a cost benefit analysis or feasibility for a project that could likely cost Guyana some US$800M, should be cause for concern to all Guyanese.
This according to Executive Member of A New and United Guyana’s (ANUG), Jonathan Yearwood.
The politician whose party holds representation in the National Assembly through its Joinder List representative, was at the time responding to an article carried by this publication captioned “Financial feasibility of gas-to-shore a ‘no-brainer’ – VP Bharrat Jagdeo.”
The politician in his response to the Vice President’s approach via a letter published in today’s paper said “I was absolutely dismayed when I read the article.”
This publication had reported Jagdeo as having said the following: “The financial aspect is a no-brainer. Any sensible person with a modicum of sense, a tiny brain, even a residual brain, would understand that.”
Yearwood in his response underscored that Jagdeo had defended his position saying, “If you are generating power at US$12 or US$13 per kilowatt hour with the current price of fossil fuel…if you can supply power at US$7 or US$8 per kilowatt hour, a mad man would make the decision not to do so and that is what this opportunity offers…to cut the cost of generation by 50% from its current level.”
According to Yearwood, “I would like to ask Jagdeo how possible was it for him to arrive at the figures of US$7 or US$8 per kilowatt hour or, “to cut the cost of generation by 50 per cent from its current level” as no feasibility study was done?
Yearwood, relying on an Investopedia definition noted that “a feasibility study is an analysis that takes all of a project’s relevant factors into account—including economic, technical, legal, and scheduling considerations—to ascertain the likelihood of completing the project successfully.”
According to the ANUG Executive Member, “Jagdeo has a Master’s degree in Economics and is a very intelligent person, thus I am confused when he says there is no need for such a study.”
Yearwood posited, “He is supposed to know and understand the vitally important reasons for conducting this type of research, especially for a project as massive and expensive as this Gas-to-Shore project.”
He was adamant that the importance of a feasibility study is based on organizational desire to get it right before committing resources, time, or budget.
It was suggested by the politician that a feasibility study might uncover new ideas that could completely change a project’s scope and that “it’s best to make these determinations in advance, rather than to jump in and to learn that the project won’t work.”
He said, too, that conducting a feasibility study is always beneficial to the project while adding that “it gives you and other stakeholders a clear picture of the proposed project.”
The ANUG Executive in his response to Jagdeo qualified his position by pointing to sentiments expressed by the former Energy Minister of Trinidad and Tobago (TT), Kevin Ramnarine who is quoted as saying, “that a rough estimate would be US$600M to US$800M for the project.”
According to Yearwood, for a project that is expected to cost Guyana between US$600M to US$800M, “is our Vice President and Minister of Oil and Gas saying that no feasibility study is needed…this cannot be the correct manner in which our Government is expected to operate, and we Guyanese should be very concerned about not having a feasibility study done for this Gas-to-Shore pipeline.”
The comments by the ANUG Executive Member is in line with the perspectives of other stakeholders who strongly disagree with posture of the Vice President on the gas to shore project, despite the fact that there is no feasibility study conducted as yet to ascertain its cost benefit analysis.
This publication on Sunday reported eminent Chartered Accountant and Attorney-at-Law, Christopher Ram, underscoring that citizens have a right to question the feasibility of the gas-to-shore project while adding that Jagdeo’s sentiments are “arrogant and insulting.”
Ram—a staunch anti-corruption advocate, was adamant that taxpayers and citizens have “every right” to information on projects and expenditure in their name. He said that the Government has a corresponding duty to both consult and inform.
“The statements by Mr. Jagdeo are more than disappointing. They are insulting; smack of the kind of arrogance which we all hoped had been put behind us, and reminiscent of Joe Harmon,” Ram continued.
Ram also pointed to the People’s Progressive Party /Civic Government’s “mixed” track record with previous developmental projects including the Amelia Falls Hydro Project, Skeldon Modernization Project and the Del Conte Road Project to advise that the gas-to-shore project be taken up by the Committee of the National Assembly and be open to consultations by all Guyanese.
Government has already identified the former Wales Estate as the location for the onshore infrastructure with a crude estimation for the cost of the project standing between US$500-800 million depending on the design, pipeline size and surveys.
ExxonMobil—the Stabroek Block Operator—is currently in the process of selecting suitable firms to conduct four studies before moving to the construction phase of the project.
These include the Environmental Impact Assessment (EIA), and a Lidar study, along with Geotechnical and Geophysical studies.
The results of those studies are expected to inform the design of the pipeline.

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