Marcella Scarlett, Business Report
Sterling Asset Management Limited has been tapped to arrange US$50 million of financing for joint-venture partners Azurest Partners LLC and Cambridge Project Development Inc, if the companies emerge as the preferred bidder for the LNG-compatible plant, the local investment firm has confirmed.
Azurest-Cambridge is one of five bidders short-listed to bid on the project to develop and operate the power plant to supply the national grid.
The Office of the Utilities Regulation (OUR) announced new timelines for the project on Wednesday for construction of the plant to begin at the end of November and for it to be commissioned two years later in December 2015.
The financing to be arranged by Sterling represents just seven per cent of the plant’s development cost.
Sterling’s vice-president of sales and marketing, Kevin Richards, said the Azurest-Cambridge investment is estimated at US$698 million, including working capital, reserves, capital expenditure, and associated project fees.
The targeted financing mix is 70 per cent debt and 30 per cent equity, with most of the funding to be raised outside of the Caribbean region, said Richards, referring to the entire US$698m project cost.
Sterling says it plans to target local institutional investors for the funds to be raised on behalf of Azurest-Cambridge.
“In the past, there have been a number of acquisitions or new investments by foreigners that did not have any local capital market participation, and we feel that a deal such as this would allow medium- to long-term investors more than sufficient return on investment relative to current market offerings,” Richards said.
Azurest-Cambridge has proposed a 388MW capacity power plant to be mounted on sea barges. The OUR tender is for 360MW.
The partners plan to leverage Azurest’s relationships with major US energy players and financial-services firms “gain easy access to the world’s cheapest supply of LNG,” the partners said in their project summary acquired by
GREGORY MAIR, the opposition spokesman on energy, is pushing for a level playing field in the pricing of heavy fuel oil sold by Petrojam to the bauxite industry as against the Jamaica Public Service (JPS), and, by extension, the Jamaican consumer.
In his contribution to the Sectoral Debate in Parliament on Tuesday, Mair contended that players in the bauxite industry purchased heavy fuel oil from Petrojam for 15 per cent less than the state-owned oil refinery sells to the light and power company.
“Why don’t we level the playing field, have a real competitive environment in the fuel sector and give JPS, and, by extension, the consumers of electricity, the same status as the alumina/bauxite producers,” Mair asserted.
According to Mair, the Bauxite and Alumina Industries (Encouragement) Act, exempts alumina and bauxite producers from paying customs duty or similar imposition on the importation of petrol fuel oil or diesel.
“Let JPS initiate a tender process where all providers of HFO/ADO (heavy fuel oil/automotive diesel oil) in the world will compete and where we will see the consumers of electricity benefiting from close to a 15 per cent reduction of the fuel cost, which would be approximately 10 per cent of our bills.
Bauxite industry enjoys reduced rates
I say this based on information I have in my possession. The bauxite industry purchases HFO 15 per cent cheaper than JPS,” Mair told his parliamentary colleagues.
He explained that the HFO used in the generation of electricity is purchased by JPS from Petrojam at a cost of some $6 billion per month.
Turning to electricity theft, Mair wants the crafting of legislation to impose stiffer fines on persons involved in the illegal act.
“The Government must sit down with JPS and agree on a clearly defined strategy for tackling the theft of electricity,” Mair said, noting that it was costing legal customers of JPS about $3 billion annually for illegal connections. The JPS is said to absorb a similar sum each year.
SUMMER is upon us and the desire to run the fan longer or even turn on the air-conditioning unit will rise.
But remember, so too will your light bill.
If the satisfaction of reducing how much you pay JPS for electricity used is not enough incentive for you to conserve, think about the thousands of dollars that could go to your bank account each year.
The price paid for electricity is higher for those with greater appetites for energy. That’s because the energy rate for each kWh above the first 100 kWh is 2.3 times the rate for the first 100 kWh
Hinds, speaking during a programme on the state-owned National Communications Network, said the initiative came at a time when many Caribbean countries were having difficulties purchasing petroleum given the high prices on the world market.
JPS customers will also benefit from a wider range of cost-cutting products as well as technical and consultative services through ATL’s Energy Solutions arm.
“I think it demonstrates a genuine intent by JPS to want to show Jamaicans how to reduce their energy bill,” group CEO Adam Stewart said, describing the move as “uncharacteristic” of a power company.
The leadership of this company (JPS) has made it clear that they want their consumers’ bills to go down, Stewart reasoned, noting the similarities in both companies mandate to promote energy conservation and efficiency.
For JPS chief executive officer, Kelly Tomblin, “this is an example of two companies coming together and saying we can provide help and not in three years, but today.”
She said though the planned construction of the 360 megawatt (MV) plant will aid the reduction of the nation’s energy woes, “educating and empowering customers to responsibly manage their energy use today will go a far way to solving the country’s energy challenges.
“We can understand the insanity of a company who wants to sell products to its clients that will ultimately drive down our sales, and people ask me if I’m crazy,” the JPS head said.
She noted, however, that her 25 years in the energy sector had inspired her conclusion that “if we do the right thing, if we train people the right way, economic development happens (and) the world grows.”
While noting the susceptibility of the JPS to shifts in the economy, Tomblin said the company hoped the partnership would be viewed as “our next step in redefining who we want to be in our hearts and in our delivery”.
ATL made its expansion into the alternative energy business with the launch of its Energy Solutions store earlier this year.
“Record energy prices in Jamaica as well as in the international marketplace have heightened the need for sustainable alternatives,” ATL’s energy and engineering manager, Paul Grey said.
An expansion into the energy business was therefore a “natural progression” for the company, Grey reckoned.
“We are at a transformational period in the Jamaican energy sector that requires us to either heavily curb our existing consumption patterns or look to alternative sources of power,” he suggested.
For Stewart, “What we find is that the average consumer doesn’t understand the appliances in their homes that consume the most power.
“So what we find lacking is the key words