THE Azurest consortium said it would fulfil the US$6.9-million ($703m) bond deposit required as preferred bidder for the construction of the 360 megawatt energy project — he largest single investment in the island.
The energy regulator, Office of Utilities Regulation (OUR), requires payment in the next two weeks otherwise the opportunity will cede to runner-up Energy World International to supply the project. The OUR insisted that it would not grant any extension.
Azurest will "absolutely" meet the financial requirement, stated Azurest managing director Kenneth Allen immediately following the OUR press conference held at the PCJ Auditorium in Kingston. He added that a team in the US was currently coordinating the transfer of funds.
The consortium includes Azurest Partners, a US-based business strategy/capital-raising firm; Cambridge Project Development Corporation, a US-based engineering, energy and environmental consultancy; Inergix Corp, a US-based energy sector-focused project management consultancy; and Waller Marine, a US-based ship engineering company.
"We are pleased to have been chosen by the Government of Jamaica. We think we have an incredible solution," Allen added in a quick address to the media about its liquefied natural gas project.
The OUR indicated at the press briefing that none of the four shortlisted entities for the project met its financial threshold. The evaluation process, however, proceeded in the national interest to reduce electricity prices, currently amongst the highest in the hemisphere.
Azurest's project will cost some US$690 million to construct, which would represent the largest single investment on the cash-strapped island.
The OUR avoided revealing estimated price savings to consumers with the Azurest model when integrated into the grid by 2016.
"It is lower than anything we have now. People are banding about 30 per cent. I don't want to say that," stated OUR director general Maurice Charvis at the briefing. "I haven't calculated the reduction yet."
The reported key to the Azurest proposal relates to sourcing smaller ships that economically transfer gas from the US to Jamaica.
Azurest partnered with Waller Marine to specially manufacture cost-effective LNG ships of one-fifth of the size, or approximately 40,000 cubic metres compared with usual 200,000 cubic-metre fleet size of LNG ships.
"Azurest is now required to furnish the OUR with its bid security, which represents one per cent of its total investment cost of the proposed project within 15 days," stated OUR director of regulation, policy, monitoring and enforcement, Ansord Hewitt, at the press briefing.
"If Azurest fails to post this bond, the OUR will proceed to offer the opportunity to provide the facility to the next ranked bidder," Hewitt said.
The ranked bidders included Azurest, Energy World International, Energise Jamaica and Optimal Energy. All four bidders offered liquefied gas solutions ranging between roughly US$0.14 and US$0.22 per kilowatt hour. The OUR avoided disclosing Azurest's pricing immediately to the public, which it considered confidential at the moment. It, however, indicated each penny difference represented billions in savings to consumers.
"[The] cost to the Jamaican consumer for every cent difference in the price of generation per kilowatt hour is something in the order of $3 billion annually," said Hewitt.
The OUR retained the services of overseas consultant Mott MacDonald to evaluate the four proposals. MacDonald's draft report raised concern of the failure of all bidders to meet the financial threshold.
"First, the consultant observed that as the Instructions for Final Proposals was designed, none of the four bidders achieved the minimum score required to qualify any of them in the category 'Ability to Finance the project' which would have operated as a filter to proceed to the next round. This was set at 75 per cent," stated Hewitt. "In the circumstances, rather than simply terminating the process, the OUR advised the consultant to proceed to complete both the technical and economic evaluations of the proposals in order to establish a ranking order in the event that the OUR could proceed to negotiate with any of the bidders."
The Government will now conduct due dillegence on the principals of Azurest.
"Azurest Cambridge is also required to provide the OUR with unequivocal evidence of its ability to execute the project as part of the lead-up of signing the power purchase agreement," stated Hewitt.