MANDEVILLE, Manchester — Local energy expert Stephen Wedderburn has slammed the Government and the Office of Utilities Regulations (OUR) for calling off a lucrative energy project which would have slashed the country's energy bill by at least 25 per cent over the next two years.
Now that the project has been scrapped, Jamaicans will not see any reduction in their electricity bills for at least another five years, Wedderburn told Manchester Rotarians at their monthly meeting at the Golf View Hotel in Mandeville last Tuesday evening.
Under the project, the Jamaica Public Service Company (JPS) would have built a new 360-megawatt plant which was to be powered by Liquified Natural Gas (LNG) with diesel as a back-up.
Up to late last year, JPS officials said the plant would've cut local electricity bills by up to 40 per cent.
Wedderburn, an independent energy specialist who has worked as project manager for the Petroleum Corporation of Jamaica's LNG project, and as acting chairman of the consumer advisory committee on utilities, said the project was called off last week because the JPS could not give the OUR sufficient details about its LNG supplies.
In a letter obtained by the members of the media last week, the OUR said the JPS gave no reasons that would have allowed its office to assess whether the extension would have guaranteed the project's future.
The power company's request for a 30-day extension was also turned down.
The OUR also said that the absence of information and the need to comply with procurement guidelines pushed it to cancel the project.
Wedderburn called the Government's move "disappointing" and "imprudent", and accused the country's policy-makers of "playing around with the country's energy future".
"It was only last October that the Government said 'we're going to come out of this LNG business and ask JPS to take over the project'. Now they've given JPS three months to do what they couldn't do in several years and they are now refusing to give a simple 30-day extension," he lamented.
Wedderburn added that this is a project which was in a very advanced stage of preparation, "...the engineering studies have been done, the environmental studies have been done, they've had their public consultations, the community is pleased to have the project in Old Harbour Bay...," he noted.
"What sense does it make to cancel a project if you do not have an alternative to put on the table? It will take at least two years to get any other project into the state of readiness that the 360-megawatt project was in, and at least another three years to actually build the project. We're talking about not seeing any new [power] plant on the system for another five years, and therefore not seeing any lowering in the electricity prices for at least another five years. We can't wait that long," Wedderburn asserted.
He opined that the cancellation seemed to have been based on a push towards coal as a cheaper energy alternative for the country.
"That may be true. But even if this is so, any coal project is gonna take two to three years just to get the project preparation together, and another three/four years to build it, so if you switch to coal now, you're talking about a solution way down in the future."
He said both the country's policy-makers and technocrats "seriously understate the difficulty of packaging a coal project for actual implementation in Jamaica."
"Such a project would be well over one billion US dollars. The thing about coal, although it may be cheaper over a life-cycle analysis, the upfront cost is higher. It typically costs two and a half to three times the cost of a gas plant," Wedderburn told Rotarians.
The JPS project was slated to cost US$600 million, but Wedderburn said coal would cost about US$1.5 billion.
"So when the Government talks and says we're gonna bring in coal, where are they going to find the investor who is going to put up $1.5 billion in the Jamaican economy today?"
Wedderburn said when the tender for the 360-megawatt plant was put on the international market, only one bidder, JPS, responded to the tender.
"If we're going to go to another tender, we may suffer the embarrassment of having no takers, and that is a serious possibility."
"The shareholders of JPS have said they are willing to invest US$600 million in the Jamaican economy, we have an investment proposal right here, but we want to throw it away, even as we hunt for another investment. It just doesn't make sense," Wedderburn said.
The 360-megawatt plant, which was slated for start-up in 2016, would have been a major feature in the country's power grid.
JPS President and Chief Executive Officer Kelly Tomblin said her company had already spent US$2 million on the project.