Arbitration to settle cost overrun claim by gas-to-energy contractor

Mar 07, 2025 News

Kaieteur News- The Government of Guyana on Thursday announced its decision to proceed to arbitration regarding disputes with Lindsayca/CH4 (LNDCH4), the contractor for the Wales Gas-to-Energy (GTE) project.

Arbitration to settle cost overrun claim by gas-to-energy contractor

An artist’s expression of the Wales Gas-to-Energy project

This comes after the contractor submitted claims including a US$50 million claim related to cost overruns. The contract, valued at US$759 million, was awarded to LNDCH4 for the construction of a natural gas-fired power plant and a natural gas liquids (NGL) plant as part of the GTE project. However, disputes between the two parties led to the intervention of the Dispute Avoidance and Adjudication Board (DAAB), which issued formal decisions on January 31, 2025. Both parties were allotted a 28-day period to decide whether to pursue arbitration. On February 27 – within that timeframe – each party served a Notice of Dissatisfaction on the other, thereby signaling its intention to initiate arbitration.

The arbitration will be administered by the International Chamber of Commerce (ICC), with the venue in Washington, D.C. Pursuant to FIDIC’s DAAB procedures, all DAAB decisions in this matter are confidential.

It was stated that notwithstanding the disputes, both the government and LNDCH4 recognise the importance of the project to the Guyanese economy. It was stated, “The contractor has resumed onsite activities, including piling, and preparations for foundation work are imminent. Construction of a cement batching plant is underway, steel for foundation work has been delivered to the site, and a man-camp is being established, with more than 170 workers currently mobilised.”

The project was expected to be completed this year. However, a 2026 deadline was recently announced. Upon completion, the project is expected to substantially lower electricity generation costs, enabling Guyana Power and Light Inc. (GPL) to reduce tariffs by up to 50%. This reduction has significant implications for the Guyanese economy, fostering more competitive production costs and stimulating broader economic growth.

Notably, ExxonMobil Guyana Limited (EMGL) has already finished constructing the gas pipeline, and the transmission lines and substations required for integration of the project are significantly advanced, with completion anticipated by mid-year.

(Arbitration to settle cost overrun claim by gas-to-energy contractor)

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arbitration, GTE, NGL, power plant

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