No LNG, no cheap light - JPS puts ball in Government's court

No LNG, no cheap light - JPS puts ball in Government's court

JPS says cheaper light bills dependent on setting up of LNG facility

BY CONRAD HAMILTON Observer senior reporter hamiltonc@jamaicaobserver.com

Friday, February 17, 2012

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WHILE emphasising its readiness to begin work on the multi-billion dollar power-generating plant at Old Harbour, St Catherine, the Jamaica Public Service (JPS) is cautioning that the project will not get off the ground until it is certain that the Government is fully committed to the establishment of an offshore Liquefied Natural Gas (LNG) facility.


At a news conference held yesterday at its New Kingston head office, chief financial officer of the JPS, Dan Theoc, said that the new plant, which would be in place by the end of 2014, would result in a 30 to 40 per cent reduction in the cost of generating electricity, and would lead to a chop in the amount that consumers pay for the service.


However, officials of the power company are maintaining that the successful implementation of the project hinges heavily on the Government's ability to honour its commitment.


The Government is expected to engage the experts to establish a floating LNG regassification unit which would receive LNG from overseas suppliers and convert it to a gaseous form, which would then be piped ashore and distributed to designated consumers such as the JPS and bauxite/alumina companies, which are also struggling as a result of the high cost of imported oil.


However, the Government's plans to construct the floating regassification unit have been affected by several delays, including the May 2011 intervention by Contractor General Greg Christie, who recommended that the then administration redo the tender process that was used to award the contract to the "preferred bidder".


According to Christie, there may have been a conspiracy on the part of several individuals to benefit illicitly from the deal.


While six companies have reportedly expressed interest in the project, the new Administration, which says that it will continue the project, has not yet awarded the contract to construct the facility or to supply the LNG to the floating unit.


But at yesterday's news conference Theoc made it clear that the fuel needed to run the US$616-million power plant will be obtained from the proposed offshore regassification facility.


"Quite frankly, this project will not go forward unless we are certain that natural gas is coming to Jamaica, and I mean certain. So we said it will take 27 months to materialise, and note we are saying 27 months from October of this year. So we are saying that over the next six months we expect that process to be finalised for us to have certainty on the matter before we move forward in complete earnest to the project," said Theoc, who described the proposed construction of the power plant as a huge investment.


He made the declaration as he provided an update on the company's performance and on major initiatives that will be undertaken over the next five years.


Those initiatives include the proposed plant, which will replace the inefficient and aged Old Harbour power-generating facility, as well as greater emphasis on fuel diversification and the strengthening of initiatives to reduce system losses from activities such as theft. Theoc also announced that the JPS will be improving its transmission and distribution network and will also be shoring up its customer service.


However, the high price of oil and its impact on the cost of generating electricity stood out as the main reasons that the company seems determined to utilise alternative sources of energy.


"Sadly, Jamaica has 95 per cent of its generation based on oil-fired units; and this is just absolutely insane. We have to focus on other fuel sources, natural gas, and coal," Theoc said, as he highlighted the impact of the high fuel cost on both the company and its customers.


"If we make that switch to natural gas, as soon as 2014, we could achieve a 40 per cent reduction in the cost of energy," Theoc added.


While highlighting the benefits of a switch to natural gas, Theoc encouraged the Government to focus on other sources of energy. "In the case of Jamaica we really need to focus on natural gas or coal/petcoke at this time, since nuclear would take eight to 10 years to develop at best," he said.


Meanwhile, at yesterday's function, the managing director of the company set up by JPS to preside over the construction of the new Old Harbour plant reiterated that the facility will be a game-changer.


"By way of context, the current peak demand in Jamaica is 630 megawatts. At one stroke, this 360-megawatt plant will replace over 80 per cent of our base loaded plants and more than 60 per cent of the peak demand," said Val Fagan the managing director of South Jamaica Power Company.


"This is very significant, and this is happening in one stroke. The idea is to replace the 40-year-old, 292 megawatt of existing plant primarily located at Old Harbour and the famous B6 located at Hunt's Bay," said Fagan.


While not naming the contractor who will be engaged to build the plant, Fagan told the Observer that the entity will be of international repute.


He added that the proposed 27-month project, will result in the creation of 1,200 jobs for both skilled and unskilled persons.



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