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Jagdeo unsure of final cost for gas-to-energy project, new price to generate electricity
…hedging success based on estimates
Kaieteur News – Recent utterances from Vice President Bharrat Jagdeo, regarding the Wales Gas-to- Energy Project has left the nation begging for a feasibility study into the multibillion US dollar facility, as the once touted ‘no brainer’ project is yet to have a final price tag attached, and offer a stable price for electricity.
Vice President, Bharrat Jagdeo trying to explain the feasibility of the Gas to Energy project
When Jagdeo was questioned on Wednesday about the feasibility of the project by the Publisher of Kaieteur News, Mr, Glenn Lall, he explained that government is currently estimating how much it could gain from the venture, as no solid figure has been determined as yet.
The Gas-to-Energy project will encompass three major aspects, that is, the pipeline to transport the gas to Wales; the Natural Gas Liquids (NGL) facility that will treat and separate the gas and the power plant to generate the electricity. So far, Guyanese have been told that the pipeline aspect, which is being pursued by US oil major ExxonMobil, will cost around US$1.3 billion. Even this is expected to increase when Exxon closes critical contracts for same.
The costs for the other two facilities had not been disclosed, prior to Jagdeo’s press engagement on Wednesday. In addition, the public was told that a fee would have been attached to the transportation of the gas but the VP has since clarified that the natural resource will be supplied free of cost.
It must be noted however, that the Guyanese public will be saddled with the debt for the Gas-to-Energy project over a 20 year period, to repay the investments made. The repayment will be done via their monthly electricity bills based on the overall cost for the venture. But since this cost has not yet been finalized, the cost of electricity too is still in limbo.
The VP shared, “We are doing estimates. We are saying US$1 billion dollars now for the pipeline. That is where we run the numbers. So assuming it comes in at US$900 million, then if it comes in that will come down; the US$1.6 cents will come down to about US$ 1.4 cents so it comes down lower. If it goes to US$1.1 billion, it may go to US$1.7 cents…that’s just the pipeline part…then if you estimate the power plant and the NGL facility to be about US$700million… that will add another one point something cents per kilowatt hour.”
VP Jagdeo said that if one were to consider estimates for paying for the pipeline, NGL and power plant, it can come down as low as four cents to about five cents per kilowatt hour. He said this would be paid back over 20 years.
He was keen to note that while the five US cents per kilowatt hour may be the cost to generate the electricity, another five cents may be lost in the transmission and distribution of the power, which could take the final price for the sale of the electricity to about US$15 cents, after adding five US cents as profits for the company.
The VP boasted that even though these numbers have not been confirmed as yet, government will still be left with the other liquids from the NGL facility such as cooking gas, which will rake in additional revenue.
Lall however pointed out during the press conference that under the previous administration, the then Minister that was responsible for the generation of electricity, Mr. David Patterson had said that the cost for the pipeline would be US$400 million, which has since been tripled.
To this Jagdeo said, “Patterson could say $10, I could say $20 (but) it’s when you go out to tender, right now we are going out to tender so we would know what the market gives us…you would put a notional figure like an engineer’s estimate…but the only time you will know is when you actually put that out to tender.”
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