Gas-to-Energy project nearing US$3B with new contract to be awarded soon for transmission of electricity

May 27, 2023 News

Kaieteur News – The cost for the Gas-to-Energy (GTE) is nearing the US$3B mark, even as the feasibility of the nation’s single largest financial project remains questionable.

Vice President, Bharrat Jagdeo

Vice President Bharrat Jagdeo during a press conference at Freedom House two weeks ago updated that three bids were received by government for the transmission of the electricity. The contract will allow for power generated from the natural gas to be supplied to the national grid, from the generation port at Wales, West Bank Demerara.

The cost of this aspect of the project has not yet been revealed as the bids are still being evaluated, according to the VP. He told reporters, “All the bids are in place. The only one that we are working on now is the bit about evacuating the power, building the substations and we went out to tender, we had three bids for that, we hired Stantec a Canadian company to help us evaluate the bids because it’s very complex and we are now in the process of awarding that contract soon.”

He said the contractor will be responsible for taking some of the power back into West Demerara, but transmitting the bulk to the other parts of the interconnected system. Jagdeo noted that this contract is expected to be executed in time to facilitate the project startup by 2024.

So far, government anticipates the pipeline aspect of the project to cost US$1.1B. It is being financed by American oil giant, ExxonMobil and would be paid back by Guyana, over a 20-year period, through purchasing the gas.

Meanwhile, a Natural Gas Liquids (NGL) facility to treat and separate the gas, along with the 300-megawatt power plant, are expected to cost just over US$1 billion, considering a repayment of US$51 million annual payback, over a 20-year period. https://kaieteurnewsonline.com/2023/02/19/guyana-saddled-with-us106m-yearly-for-20-years/ Government has approached the United States Export Import (EXIM) Bank for financing of those components.

Additionally, Head of the GTE Taskforce, Winston Brassington had announced during this year’s International Energy Conference, hosted at the Guyana Marriott Hotel, that $400 million- approximately US$2 million had been set aside to compensate land owners that would be affected by the pipeline. This means the project price stands at US$2.3 billion presently, considering the known costs, shared by government.

Attempts made by the Opposition in Parliament to ascertain the final cost of this project has been unsuccessful.

The project is likely to cost US$3 billion when additional expenditure is considered for the transmission of the electricity and the new substation being constructed at Eccles, East Bank Demerara to support the initiative. It was explained that the Eccles substation would receive power from both the new natural gas facility as well as the Amaila Falls Hydro project which is yet to commence. https://kaieteurnewsonline.com/2022/04/24/gpl-to-establish-control-centre-at-eccles/

In addition to those charges, Jagdeo explained that government has hired a consultant to assist the nation in evaluating the bids. This will attract a separate cost which has not yet been announced.

Even though concerns have been raised regarding the escalating cost of the project, the government is reluctant to conduct a feasibility study. In fact, the VP believes the viability of the initiative is a “no-brainer” given his “estimates” on returns from the project.

At the end of 2022, the country’s total stock of public debt stood at US$3.6B. This means, with one project, Guyana could be doubling its total public debt.

GTE component	Cost
Pipeline	US$1.1B
NGL and Power plant	US$1B
Compensation for land owners	US$2 M
Transmission of electricity	???
New Eccles Substation	???
Consultancy Services	???
TOTAL	US$2.3B and counting

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Electricity, feasibility, gas-to-energy, transmission

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