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Paulwell: JPS to source LNG

BY INGRID BROWN Associate editor — special assignment browni@jamaicaobserver.com

Thursday, October 04, 2012    

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ENERGY Minister Phillip Paulwell says that the Jamaica Public Service Company (JPSCo) will now be responsible for sourcing the Liquified Natural Gas (LNG) needed to fuel its new generation plant.

"We are very confident that with the tremendous international reach that Marubeni and East West Power (JPSCo parent company) have, they are quite capable of doing this on their own," Paulwell told journalists at yesterday's Jamaica House press briefing at the Office of the Prime Minister in Kingston.

He said the recent discussions in Japan resolved that JPSCo would be fully responsible for ensuring that the generation plant is properly fuelled.

He explained that the light and power company received a licence last year to establish 360 megawatts of new generation driven by natural gas. However, he said that the Government interceded and attempted to get the fuel to the plant by way of FSRU pipeline and LNG supply.

"JPSCo has now accepted full responsibility for that," he declared.

As to concerns that JPSCo could be forced to use diesel if it is unable to source LNG, resulting in higher electricity costs, Paulwell said the issue was raised in the discussions.

"The intention now... is from day one that gas will be the fuel that will be used at this plant and the only time we should contemplate using diesel is in the event of a hurricane when you have to move out the FSRU unit for a couple days," he said, adding that this has been accepted by JPSCo.

In relation to JPSCo's guarantee that using LNG will result in lower electricity costs for consumers, Paulwell said that the Government — having had to adhere to strict procurement rules — could not be doing deals negotiating and "playing off one against the other".

"We had to be very strict in our procurement. I know otherwise from JPSCo and the strength they have in the international marketplace that they can extract better deals than Government can and so I am comfortable with their assurance," he said.

Meanwhile, Paulwell said the Government was not anticipating any legal backlash from Korean conglomerate Samsung Corporation following its decision to put the LNG project into private hands.

"There can be no legal battle as we're fully protected. Both companies, if they really had wanted to secure a deal, would have offered significantly lower prices. Those prices were too high. We are in touch and they fully understand our situation," he said.

Samsung Corporation was selected as the preferred bidder in July for the development and operation of the LNG infrastructure in Jamaica.

Also, he said the decision to continue with the LNG project, ten months into the new administration, was to preserve the country's integrity in the international marketplace.

"...It would have done severe damage to our integrity in the international LNG marketplace if a new government was to come and unravel everything, so we persisted," he said.

He also disclosed that discussions began with JPSCo from as early as March for the company to take over the process.

"While we were doing so we were very careful to be engaging with JPSCo all along and to get the assurance that if we fail, they would be able to step in," he said.

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