Dr Vincent Lawrence, head of the Electricity Sector Enterprise Team (ESET), says the Jamaica Public Service Company (JPS) will conclude an agreement with General Electric for the retrofitting of its Bogue power plant in Montego Bay to be fired by liquefied natural gas.
Lawrence said the expected supply cost for LNG to the plant is US$14 per million BTUs, which is about half the US$27 unit cost to supply the plant with diesel, he added.
“We are very excited,” said Lawrence on Tuesday at his third press conference as chairman of ESET – a special body created to execute projects aimed at reforming Jamaica’s electricity market. “We are satisfied that the project is on target for the first quarter of 2016.”
His announcement puts to rest speculation that JPS was still considering a flirtation with propane as an interim fuel before moving to LNG.
The contract being finalised with General Electric is the second major announcement for the 115MW Bogue project, following last week’s disclosure in a market filing by JPS that it had hired Fortress Energy, another American company, to supply gas for the plant.
Last night, JPS said that General Electric would retrofit the plant for LNG, while Fortress would develop the regasification and storage facility. Fortress will also supply the gas.
JPS says the deal with General Electric is valued at US$15 million. However, the power utility was mum on the Fortress transaction, nor would it disclose the price at which Bogue would supply power to the grid under the partnership.
Previously, the company had floated US$80 million as an indicative cost for the full project, but that was before it found partners for the jobs.
Lawrence also announced Tuesday that JPS has got 12 expressions of interest through its request for proposals in June for development of a 190MW plant in Old Harbour, St Catherine, each of which has been issued with material to prepare for bidding on the contract.
Proposals have come in from Jamaica’s state-owned refinery, Petrojam, Royal Dutch Shell, British Petroleum, Clean Core and Fortress Energy. Clean Core was runner-up to Fortress Energy on the Bogue bids.
The plans for Old Harbour have grown more ambitious since the project was first mooted. Now ESET sees itself as the fulcrum for the development of a regional gas hub for the Caribbean that was first discussed in Jamaica during talks with US Energy Secretary Dr Ernest Moniz during President Barack Obama’s official visit in early April.
“Jamaica is trying to become the hub for gas distribution in the region. It is one of the things we are very interested in,” said Lawrence.
“In the request for proposals, we have requested that they provide a perspective on how Jamaica could serve the region. That is one of the things we will be assessing,” he said.
Discussions about such a hub flowed from a study done by Inter-American Development Bank on the regional demand for natural gas and the economics around consistent supply.
Bogue is being converted from automotive diesel oil to LNG. Lawrence said JPS had also looked at propane and ethane as fuel options, but finally decided to convert to LNG immediately.
“They have had meetings with General Electric and GE is on track to carry out conversion. The contract is to be signed early July,” said Lawrence.
The plant conversion will take 26 weeks, or just about six months, from the award of contract.
JPS confirmed the timeline of the first quarter of 2016 for the conversion to be completed.
Lawrence said Fortress will ship gas to the plant weekly from its Miami, Florida, facility to the port in Montego Bay.
For the pipeline to be built by Fortress from the port to the Bogue plant, the preliminary design, engineering, agreements with the Port Authority of Jamaica and authorisation from NEPA are being pursued, the ESET chairman said.
Jamaica Public Service Company Limited (JPS) has inked a deal with US-based New Fortress Energy to provide a long-term natural gas solution for its power plants, starting with Bogue.
However, the power supplier is not yet saying which gas it has selected as fuel and the price at which it will be supplied.
JPS itself has formerly floated the idea of propane initially and a future migration to natural gas.
The power utility has also not disclosed which entity will be responsible for retrofitting the plant at Bogue, which currently uses diesel fuel but has the infrastructure that allows it to transform to gas fuel.
As indicated to the Electricity Sector Enterprise Team last year, JPS is to convert the 115MW gas turbine plant at Bogue in Montego Bay from automotive diesel oil initially to propane by the fourth quarter of this year. The conversion, it projected, would result in an approximate 40 per cent fuel-price reduction.
The current plant consists of three individual units: two combustion turbine generating units with a total capacity of 80MW; and one 40MW steam-generating unit. The two combustion turbines operate on diesel fuel but are capable of converting to natural gas.
JPS said in a February update posted on its website that an independent engineer had been retained for the project and that construction was expected to begin by the second quarter of 2015 and that the plant should begin operating on gas fuel by the first quarter of 2016.
The company said this week that the gas-supply agreement with Fortress would pave the way for work to begin on the infrastructure needed for the delivery of gas to Bogue by early 2016.
The parties are firming up their agreement, which they expect to finalise by the end of this month.
Kelly Tomblin, JPS’ president and CEO, said that the company had received the final sign-off from the Government, through the Electricity Sector Enterprise Team, for the project.
“JPS understands the importance of gas to long-term sustainable energy prices and is proud to be able to finally bring gas to Jamaica,” she said in a company-issued statement.
JPS said New Fortress Energy was selected from a list of eight bidders who had responded to JPS’ request for proposals earlier this year.
Wesley Edens, founder and co-chairman of the board of Fortress Investment Group, said his company was quoted as saying that his company planned to “help make Jamaica an energy hub for the Caribbean and Latin America”.
New Fortress Energy is part of the Fortress Investment Group, a diversified global-asset firm with approximately US$70 billion of assets under management.
Investment vehicles managed by affiliates of Fortress own one of the largest crude oil terminals in the United States, as well as the first liquefaction facility in Florida, from which the gas will be supplied to Jamaica.
JPS has already submitted its proposal for Bogue to the Office of Utilities Regulation. The power utility previously telegraphed that the Bogue project may cost about US$80 million.
JPS senior vice-president for generation and project development John Kistle said in February that the converted installation was likely to include new pipelines and storage facilities constructed by fuel suppliers who would want to recover their costs. The new infrastructure is also likely to require new terminal facilities for off-take and supply of gas.
Request for additional comment on the new Fortress partnership were unanswered up to press time.
KINGSTON, Jamaica (JIS) –The Government has changed the name and mandate of the Rural Electrification Programme (REP), to the National Energy Solution Company Limited (NESCL), with an expanded role to achieve energy efficiency.
Making the disclosure, Minister of Science, Technology, Energy and Mining Phillip Paulwell said the company, while bringing electricity to the 2.5 per cent of the island that is without the commodity, will also play a major role to reduce energy losses.
He noted that thousands of houses across the island are not properly wired, and working with the Jamaica Public Service Company (JPS), and the Jamaica Social Investment Fund (JSIF), the problem will be finally solved.
“The NESCL is going to take that on. We are going to be working with the JPS (to cover) over 100 communities indentified by JSIF, where we have to do regularisation,” the minister said, while addressing the opening of an energy forum today at the Jamaica Pegasus Hotel in New Kingston.
“My role is to ensure that when we go through communities, we do not see this phenomenon. It is dangerous, it causes fires, deaths, and we are going to regularise the situation, once and for all,” Paulwell emphasised.
The minister also pointed out that much of the services offered by the Government Electricity Inspectors (GEIs) will be privatised, so that persons can get timely certification to access regular electricity.
The workshop is being held over three days, and will hear from representatives from six countries on their experiences to reduce energy losses.
Partners in the workshop are the United States Agency for International Development (USAID), Office of Utilities Regulation, and the JPS.
The REP was incorporated in 1975, with the specific mandate to expand the reach of electricity supply to rural areas, where the provision of such services would not be economically viable for commercial providers of electricity.
It constructs electrical distribution pole line in electrified areas and provides house wiring assistance through a loan programme to householders.
Thousands of Jamaica Public Service Company (JPS) customers can expect to see an increase in their electricity bills this month as the general consumption tax (GCT) on residential use is now in effect.
The tax, which became effective on May 1, will begin to show on customers’ bills as this month’s bill will be based on energy consumption in May.
The standard 16.5 per cent tax will only affect residents who use more than 350 kilowatt-hours (kWh) for the month.
One kilowatt-hour equates to 1,000 watts being utilised per hour and everyday household appliances such as bulbs use approximately 100 watts per hour while air-conditioning units use 3,500 watts per hour (or 3.5kWh).
Finance Minister Dr Peter Phillips had indicated, during his contribution to the 2015-2016 Budget Debate, that GCT would be reinstated on residential electricity consumption, after being suspended in 2010, as part of the Government’s revenue measures.
In a PricewaterhouseCoopers’ report titled ‘Jamaica: 2015-16 Budget: Tightening the Tax Net – Spreading the Burden’, it was stated that the measure would promote greater energy conservation and assist in reducing the country’s oil importation bill.
The Jamaica Public Service said on Thursday that consumers would only be taxed for the kWh they use in excess of 350kWh, meaning if a customer is billed for 400kWh of energy consumption, only 50kWh would have GCT applied to it.
Customers will be able to see the tax as it will be a separate line item on the bill.
The JPS estimates that just over 30,000, or approximately six per cent, of its customers will be affected by the tax on electricity usage above the 350kWh level.
KINGSTON, Jamaica – United States President Barack Obama says he is pleased with the level of talks between himself and Prime Minister, Portia Simpson Miller this morning, on a range of issues including security, energy and economic growth.
In his statement issued at the Office of the Prime Minister Wednesday following a bilateral meeting, the US president said energy was one of the main areas discussed as well as his country’s role in helping Jamaica and other Caribbean states reduce costs associated with it.
“People in the Caribbean despite having less resources, are paying significantly higher prices for energy. If we can lower those costs through the development of clean energy and increased energy efficiency, we could release a whole host of additional investment and growth. There are going to be a whole host of areas where the US can be helpful,” he said.
The commitment comes, even as Venezuela, backed by 29 countries, including four Caricom states, signed a letter which it issued to the United States embassy in that country, and which was carried in one local newspaper, calling on the president to withdraw the executive order which the White House issued earlier this month, labelling the oil-rich South American country a threat, and imposing new sanctions against it.
A number of Caricom countries, including Jamaica, now enjoy preferential arrangements through the PetroCaribe Agreement, under which they are allowed to buy oil from Venezuela, and repay a percentage of the cost up front. In Jamaica’s case, the balance must be repaid over 21 years, at one per cent interest. But, the International Monetary Fund (IMF) has cautioned such countries that there could be a negative impact on their economies if Venezuela’s external liquidity problems escalate.
In the meantime Jamaica’s prime minister said within the context of the government’s extended fund facility with the IMF, the leaders had “explored additional ways of imploring our trade and economic relations”, including in the area of energy security and renewable energy.
She also pointed out that one of the outcomes of the visit was the signing of a statement of intent between the countries, to pursue the development and deployment of energy-related technologies.
“We aim to encourage increased bilateral trade, boost the development of emerging technologies and industries and pave the way for future innovation in energy-related fields,” she said.
The US President leaves the island later today for the Seventh Summit of the Americas, in Panama.