Govt. unsure how soon electricity bills will be reduced by 50% after Gas-to-Energy project comes online

Sep 27, 2024 News

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Kaieteur News – The highly touted US$2B Gas-to-Energy (GTE) project is intended to reduce monthly electricity bills by 50% but Vice President Bharrat Jagdeo is unable to say how soon consumers can expect this reduction.

In the absence of a feasibility study for the project, stakeholders have been constantly questioning the project’s capacity to deliver cheaper electricity.

On Thursday, the VP during his weekly media conference was asked how soon after the operationalization of the plant, a 50% reduction in the cost of electricity could be expected.

To this end, he explained, “I don’t know if one day or a week or so but it will, it should happen almost immediately because if we are getting all this power in the grid immediately that means we can turn off a lot of the high-cost generating equipment that we have now and substitute this with the new power plant so almost immediately. The benefits will be seen almost immediately.”

The GTE project is expected to deliver some 300 megawatts (MW) of cleaner and cheaper electricity.

Jagdeo noted that the Heavy Fuel Oil (HFO) generating sets, currently in operation, will be turned off and be used as a backup power supply.

“If the Gas-to-Energy project can meet the demand, and that is we are generating at 4 cents per kilowatt hour there, then every other generating set will go into reserve,” he said.

The Vice President was keen to note that the country is presently operating without any reserve, due to a large increasing demand for electricity.

According to him, “Our installed capacity is close to peak demand so there is no reserve so that’s why if a unit goes down you have power outages, so these reserves now would be there so just in case you have local issues or something, they would be maintained and put into reserves.”

Be that as it may, Jagdeo said if the demand surpasses the 300 MW generated by the Wales power plant, government “may have to turn on some of these units back again.”

Government expects the GTE project to be completed by April, 2025. The contractor, CH4/ Lindsayca has however indicated that the power plant and Natural Gas Liquids (NGL) facility will be handed over at a later date. The extension is likely to cost the contractor some US$11.3M per month according to Jagdeo.

Earlier this year, award winning international Lawyer, Melinda Janki in a letter to the United States Export Import (US-EXIM) Bank flagged government’s failure to publish coherent and convincing financial analysis to support the business case for the project.

In her April 25, 2024, letter to the President of the US-EXIM Bank, Reta Jo Lewis, Janki indicated that the financial institution might wish to obtain this information before further considering the government’s loan application.

It was reported in April 2023 that the GoG applied to the US-EXIM Bank for a US$646M loan to fund a natural gas-fired power plant and natural gas liquids plant to be constructed by contractor CH4-Lindsayca. The plants, to be constructed at Wales, West Bank Demerara are part of the GTE project, which also includes a pipeline being built by ExxonMobil Guyana Limited to transport the gas from offshore to the site.

The US-EXIM Bank has not yet approved Guyana’s application for the loan and is said to be in the concluding phase of its independent analysis of the project.

Janki said on Saturday that information that should be available publicly on the project indicates that it could cost US$1.9B. She was keen to point out this estimate could increase as big infrastructure projects are notable for exceeding budget.

“The cost of this Project will be borne by the Guyanese public because the government will have to take money from the public purse or use public assets such as oil in order to pay ExxonMobil Guyana and the other contractors. Similarly, any loan from Eximbank will have to be paid back from public money,” the lawyer reasoned.

To this end, she explained that the people of Guyana are therefore entitled to see that the proposed gas project is financially viable before the government seeks to borrow money to proceed.

She argued, “It is not sufficient for the government to make promises. Economic development is not a matter of wishful thinking. Economic development requires robust economic analysis of the global energy market. The proposed project will lock Guyana into gas at a time when the fossil fuel industry is on a decline and is likely to leave Guyana with stranded assets and an adverse impact on Guyana’s economy.”

 

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• bills, Electricity, GTE, Jagdeo, reduce

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