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OPEC Keeps Oil Production At Current High Level

December 7, 2015 Webmaster

Nigeria’s Minister of State for petroleum resources and President of the OPEC conference Emmanuel Ibe Kachikwu (left), and OPEC’s secretary general Abdalla Salem El-Badri of Libya attend a news conference after a meeting of the Organisation of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Friday, December 4, 2015.

OPEC nations decided on Friday to keep producing oil at their current high levels, effectively acknowledging their inability to push up crude prices.

An attempt to nudge the cost of oil higher would have involved lowering output. Instead, the organisation’s endorsement of present output, which is more than 1.5 million barrels a day above the formal ceiling of 30 million barrels, is likely to push the price of oil down further.

The ministers of the Organis-ation of the Petroleum Exporting Countries appeared to have little choice. Major producing nations in the cartel were opposed to reducing output. Instead, OPEC is poised to produce more oil.

Iran, which once pumped around four million barrels a day and is now down to about half that, is preparing to come back fully on line once it sheds nuclear-related sanctions in a few months.

Senior oil official Amir Hossein Zamaninia said last week Iran hopes to bring an extra 500,000 barrels on the market by early next year. He said he hopes the extra output will be accommodated within OPEC’s formal ceiling of 30 million barrels a day.

Arriving for Friday’s meeting, Iranian oil minister Bijan Namdar Zanganeh said Iran is ready to discuss a ceiling for its production but only after his country makes a “full return to the market.”

Iraq is also resurgent. The country has seen the fastest rise in crude production in the world this year. It was pumping more than 4 million barrels a day last month and was responsible for last month’s biggest monthly rise in output among all OPEC countries.

And the ministers agreed to readmit past member Indonesia, to expand their ranks to 13. While that country’s production goes mostly for domestic consumption, that move could also add some to the total amount of OPEC barrels on sale.

A final statement on the meeting was unusual in not mentioning any decision on production ceilings. But conference president Emmanuel Ibe Kachikwu told reporters that there was agreement to maintain “current actual production”, which is well above the formal ceiling set at 30 million barrels a day.

Friday’s news pushed oil prices down, with the US benchmark rate sliding 2.7 per cent on the day to US$39.99.

The decision effectively leaves it up to individual members how much crude to pump and was a strong signal of OPEC’s eroding ability to act as a group in efforts to influence supply, demand and prices.

Kachikwu acknowledged as much, telling reporters asking about Iran’s return: “At the end of the day every country has a sovereign right to bring to the marketplace its resources.”

“The logic is simple,” he said, of OPEC’s present clout in a market where non-members such as Russia and U.S. shale producers play an increasingly large role. “We are only 35 per cent of the producers and there are still 65 per cent out there.”

Some OPEC members are producing at their limit and like at previous meetings, the pressure was on swing-producer Saudi Arabia, which accounts for about a third of OPEC’s output, to cut back. But the desert kingdom remained opposed.

The Saudis already resisted cutbacks a year ago, a strategy calculated to put higher-cost outside competitors like United States shale oil producers out of business. The hope was that would eventually lead to a drop in supply and a rebound in prices.

That plan clearly hasn’t worked, with benchmark US crude’s value falling by more than 40 per cent over the past year and now hovering around the US$40 mark per barrel.

Cushioned by past profits on oil, the Saudis can hold out, even if production costs exceed sale revenues. Not so much some others.

Kachikwu, the conference president who also represented Nigeria at the meeting, acknowledged that continued low prices will hurt his country.

“There will be pain,” he said.

The Gleaner

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JPS Stands To Lose $400m Yearly From Prepaid Meters

December 7, 2015 Webmaster

Jamaica Public Service Company (JPS) claims that switching all its low-consuming users to prepaid meters would increase the risk profile of the utility provider, and secondly, cost it hundreds of millions in lost non-fuel revenue annually – an ironic twist given that the meters are meant to curtail losses.

JPS currently offers prepaid meters in select inner-city areas under a pilot programme, but its admission of the cost puts the timeline for its larger role in question.

“If all customers consuming less than 100 kilowatt hours switched to the prepaid service, JPS stands to lose J$399 million in non-fuel revenues per annum,” the power utility said in its annual tariff application documentation published late last month by its regulator, the Office of Utilities Regulation (OUR).

“By any measure, this exposure is significant and further increases the risk profile of the company, especially given the challenges in meeting certain financial covenants.”

JPS holds US$324 million in long-term loans, and its financial covenants require a minimum undisclosed debt to earnings before interest tax depreciation and amortisation. The company was fully compliant with all its loan obligations as at September 2015.

Customers that consume less than 100 kWh are classified as Rate 10 users. These users usually are low-income households but account for some 222,000 of the 594,000 JPS customers, according to OUR documentation.

Regular customers – Rate 20 – who consume less than 75,000 kWh per month would remain revenue neutral for the switch to prepaid meters.

JPS added that this level of loss is “unsustainable” and is only acceptable for the remainder of the prepaid pilot which offers prepaid meters to a relatively small number of customers. The power utility wants the OUR to increase the prepaid rates to Rate 10 customers in order to remove a large part of that shortfall.

“We would, however, like to state that the rate structure should aim for revenue neutrality as the prepaid programme evolves,” said JPS.

The company proposed an adjustment to non-fuel tariff rates for Rate 10 prepaid customers to $14.4311/kWh for the first 119kWh in a 30-day cycle; and $20.5719/kWh for every kWh above 119kWh in a 30-day cycle.

The OUR rejected that specific JPS proposal. It approved instead a Rate 10 prepaid rate of $13.19/kWh for the first 100kWh in a 30-day cycle and $20.85/kWh for every kWh thereafter for a 30-day cycle.

JPS made US$23.7 million net profit over nine-months ending September 2015 on revenues of US$583 million which nearly doubled the US$12.5 million in profit earned a year earlier.

There was no response to mailed queries and calls to JPS for comment on this story up to press time.

The Gleaner

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Bill Gates joins with Mark Zuckerberg and other top investors for urgent global action on climate change

December 4, 2015 Webmaster

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Bill Gates, co-founder of Microsoft [Image source: On Innovation.com, via Flickr]

On the opening day of the COP21 global climate change meeting in Paris, Bill Gates and Mark Zuckerberg have announced they have joined together with other private investors to help fight climate change by investing in renewable energy. The Breakthrough Energy Coalition will provide financial support to companies that take clean energy innovations out of the laboratory and commercialize them, the main idea being to accelerate progress on clean energy development.

“The world is going to be using 50 percent more energy by mid-century than it does today” said Mr Gates on his gatesnotes blog. “That should be good news, especially for the world’s poorest, because right now more than 1 billion people live without access to basic energy services. Affordable and reliable energy makes it easier for them to grow more food, run schools and hospitals and businesses, have refrigerators at home, and take advantage of all the things that make up modern life. Low- and middle-income countries need energy to develop their economies and help more people escape poverty. But the world’s growing demand for energy is also a big problem, because most of that energy comes from hydrocarbons, which emit greenhouse gases and drive climate change. So we need to move to sources of energy that are affordable and reliable, and don’t produce any carbon.”

Mr Gates added that although current renewable energy technologies, like wind and solar, have made a lot of progress and could be one path to a zero-carbon energy future, given the scale of the challenge, the world needs to be exploring many different paths, and that means it also needs to invent new approaches. These energy breakthroughs will be made by private companies, but their work will rely on the kind of basic research that only governments can fund.

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Mark Zuckerberg, co-founder of Facebook [Image source: Jason McELweenie, Flickr]

Ways in which to promote clean energy innovation

Earlier in the year, Mr Gates set out on his blog three important ways in which to promote clean energy innovation – incentives, markets and treating poorer countries fairly.

The first of these involves governments drastically increasing their funding for research on clean energy solutions. At present, only a few billion dollars are spent per year on researching early-stage ideas for zero-carbon energy, when really, the world should be spending two to three times as much. Gates said that governments should be doing this for the public good and that the benefits of doing so are “far greater than the amount that the inventor can capture.” Expanded government support for energy research will also lead to more private investment. Gates has invested in companies developing new batteries and other energy storage solutions and also companies developing advances in solar power technology. However, governments need to act quickly on this because these energy transitions are time-intensive.

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Windmill Sunset [Image source: Max and Dee Bernt, Flickr]

The second important step is to ensure that energy prices reflect the full impact of emitting carbon. At present, the market does not factor in ‘negative externalities’ – the costs to health and the damage to the environment caused by greenhouse gas emissions. If these costs are reflected in the price, renewable energy will become more competitive with fossil fuels and that in turn will attract more investors to the market. Governments should support this process by creating incentives to develop new solutions while also ensuring certainty in the market so that energy companies can plan ahead and enact the transition to zero-carbon energy.

The third step is to recognize that, at this late stage when climate change is already starting to have disastrous effects on the world, it will continue to hit the poorest people in the world hardest. This means that those countries that have done most to create this problem should spend the most to invest in mitigation and help poorer countries to adapt. The Gates Foundation is now doing this by helping small farmers in poorer countries to adjust to hotter and more unpredictable weather by increasing productivity.

The Breakthrough Coalition

The Breakthrough Coalition consists of some of the world’s top investors who have joined together in the understanding that technology will help to solve the world’s current energy issues, particularly the urgent issue of climate change. This requires an aggressive and urgent global program of zero-emission energy innovation based on a model of public-private partnership between governments, research institutions, and investors. It will involve large funding commitments with a key role being played by governments, with aggressive increases in funding for basic and applied energy research. Current levels of government funding are insufficient.

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[Image source: CheapFullCoverageAutoInsurance.com]

The coalition is focused on the creation of a network of private capital intended to drive forward the transition to an advanced energy future. It is doing this by concentrating on providing investment for early stage companies, involving early investment through seed, angel and Series A investments, with commercial capital expected to take over in the later stages once the investments are de-risked. It will invest in a number of sectors, including electricity generation and storage, transportation, industry, agriculture and energy efficiency. The aim is to boost the development of novel technologies and innovations that make existing technologies more efficient, scalable or help to reduce costs. Given that most of these innovations will come through government research pipelines, the coalition has decided to focus its investments on countries participating in the Mission Innovation international initiative.

Mission Innovation

Mission Innovation was also launched on the opening day of COP21. It consists of a commitment by20 countries to invest in clean energy research and its aim is to “reinvigorate and accelerate global clean energy innovation with the objective to make clean energy widely affordable.” The initiative will seek to double government funding for clean energy innovation in each of its member states

The Breakthrough Coalition consists of:

Bill Gates, co-founder of Microsoft; Mark Zuckerberg, co-founder of Facebook, and Dr Priscilla Chan; Mukesh Ambani, Chairman and Managing Director of Reliance Industries (India); John Arnold, co-chair of the Laura and John Arnold Foundation; Marc Benioff, Founder, Chairman and CEO of Salesforce.com; Jeff Bezos, Founder and CEO, Amazon; HRH Prince Alwaleed bin Talal, Chairman of the Board of Trustees, Alwaleed Philanthropies, Saudi Arabia; Richard Branson, Founder of the Virgin Group; Ray Dalio, Founder, Bridgewater Associates; Aliko Dangote, Founder and Chief Executive, Dangote Group, Nigeria; John Doerr, General Partner, Kleiner Perkins Caufield & Byers, United States; Reid Hoffman, Founder, LinkedIn and Partner, Greylock, United States; Chris Hohn, Founder, The Children’s Investment Fund, UK; Vinod Khosla, Founder, Khosla Ventures, United States; Jack Ma, Executive Chairman, Alibaba Group, China; Patrice Motsepe, Founder and Executive Chairman, African Rainbow Minerals (ARM), South Africa; Xavier Niel, Founder, Iliad Group, France; Hasso Plattner, Co-founder and Chairman, SAP, Germany; Julian Robertson, Founder and Chairman, Tiger Management, United States; Neil Shen, Founding Managing Partner, Sequoia Capital China, China; Nat Simons and Laura Baxter-Simons, Co-founders, Prelude Ventures, United States; Masayoshi Son, Founder, Chairman and CEO, SoftBank Group Corp., Japan; George Soros, Chairman, Soros Fund Management LLC, United States; Tom Steyr, Businessman, Philanthropist, and President, NextGen Climate, United States, Ratan Tata, Chairman Emeritus, Tata Sons, India; Meg Whitman, CEO, Hewlett Packard Enterprise, United States; Zhang Xin and Pan Shiyi Co-founder and CEO, SOHO China, Chairman, SOHO China; and finally, the University of California (UCLA).

The Mission Innovation initiative consists of:

Australia, Brazil, Canada, Chile, China, Denmark, France, Germany, India, Indonesia, Italy, Japan, Mexico, Norway, Saudi Arabia, South Korea, Sweden, United Arab Emirates, United Kingdom and the United States.

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Patterson calls for political awareness of climate change issues

December 4, 2015 Webmaster

PATTERSON… we have great cause to be concerned about the effects of climate change

NASSAU, Bahamas (CMC) — Former Jamaican Prime Minister P J Patterson says there is need for strong political awareness of the relevant issues related climate change and disaster risk considerations.

Patterson, who spoke at the opening of the 9th Caribbean Conference on Comprehensive Disaster Management earlier this week, encouraged politicians to foster close collaboration with regional agencies with mandates regarding climate change.

“Political awareness and support are key in order to ensure full support at the highest level of Governments for appropriate allocation of national funds to address these issues.

According to Patterson, the region is fully aware of the challenges linked to climate change, as faced by small island developing states .

“Our regional Heads of Government and our people are well-acquainted, many of us through adverse experiences, with the challenges our countries face as small island developing states in a highly hazard prone region of the world. At times, it seems that the rich natural endowments with which we have been blessed are borne by curses that serve to impede our advancement.”

The former prime minister stressed the importance of a “consolidated approach and collective action to protect our environment to avert disasters where we can, or at least, to mitigate their effects, and at the same time, to spur sustainable development”.

He added that the region’s approach to the achievement of sustainable development globally, regionally and nationally must be through integrated efforts to achieve resilience.

“The building of a resilient nation has to begin and proceed on the base of community resilience. We can learn a great deal from the Cuban model, which has been tested and proven.”

Concerning national policies, Patterson said climate change measures must be integrated.

“This must resonate with us in the Caribbean. We have great cause to be concerned about the effects of climate change; rising sea levels which threaten our coastal developments, and devastate our agricultural production; more severe tropical storms which can eradicate years of hard work in a few short hours; and proliferation of tropical diseases.”

He added that the disasters constitute a “clear and present danger to our lives and well being. It could wipe out the tourism product entirely and destroy all our prospects for economic growth”.

In making reference to the Paris conference, Patterson said the outcome is very important to the region “as we are disproportionately vulnerable to the effects of climate change. The countries represented here are in the main small island states. While we fall within the same category of landlocked and developed countries which are also most disadvantaged, I believe the Caribbean and the small Pacific Islands should be singled out for very special and urgent attention by the Developed World and the International Institutions as is now the accepted case for Africa.”

Patterson, at the same time, said officials need to broaden their outreach for the next conference to include, possibly as associates in the first instance, all nations which are part of the geographic space — Guadeloupe, Martinique, Curacao, St Maarten, Cuba, the Dominican Republic and Puerto Rico.

“Natural disasters, when they come, do not seem to respect national borders. They spread their fury, regardless of flags. In avoiding, moderating and responding to disasters, we need a more inclusive approach to secure the best deployment of personnel, technology and equipment,” he said.

The Observer

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US to fund climate risk insurance coverage

December 4, 2015 Webmaster

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THE US yesterday announced that it will be contributing $30 million to climate risk insurance initiatives in the Pacific, Central America, and Africa to help small island nations respond to severe climate-related impacts.

At a meeting with leaders of small island nations in the three regions, President Barack Obama said the move was part of a broader set of actions to help vulnerable populations strengthen their climate resilience, from providing climate data, tools and services, to incorporating climate resilience considerations into development assistance.

“The announcement is an important step toward the goal G-7 leaders set this summer to increase by up to 400 million the number of people in the most vulnerable developing countries who will have access to insurance against the negative impact of climate change hazards by 2020,” the WHite House said in a statement to the press yesterday.

The funds will support insurance initiatives under the Pacific Catastrophic Risk Assessment and Financing Initiative, expand the Caribbean Catastrophic Risk Insurance Facility to include Central American countries, and support the African Risk Capacity programme.

The Observer

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Abengoa Says Old Harbour Project Will Employ Hundreds

December 2, 2015 Webmaster

The oil-fired JPS power plant in Old Harbour Bay, St Catherine is to be converted to LNG.

Spanish firm Abengoa SA has revealed the value of the upgrade and employment prospects for the 190MW power plant project amid pre-bankruptcy filings in its home market.

“The contract for the plant, which will be powered by natural gas and cooled by seawater, is worth more than US$200 million,” said Abengoa in a release.

The engineering and renewable energy firm was selected as preferred bidder by Jamaica Public Service Company (JPS), and the parties are in the process of finalising the contract for the LNG-fired power plant. JPS has said the full project cost would be closer to US$300 million.

Abengoa has about four months in which to secure deals with its creditors and restructure its debts if it is to escape full bankruptcy. JPS has said it is not ready to give up on its preferred bidder just yet, but is monitoring the situation.

Abengoa said it will be responsible for the design, engineering and construction work of the plant that will replace an existing fuel-oil facility and is expected to “create between 300 and 500 jobs during the construction phase”.

JPS wants to decommission the existing fuel-oil plant and move to a natural gas facility to create a cleaner, efficient and more reliable source of power, added Abengoa.

The more than 40-year-old Old Harbour plant remains one of the least energy efficient in the island and its upgrade would form part of the Jamaican Government’s drive to increase cleaner forms of fuel. Jamaica aims to increase renewable energy reliance to 20 per cent of the energy output within the medium term.

SEAWATER COOLING SYSTEM

“The plant will use a seawater cooling system that returns the warm water without adversely impacting the environment. Abengoa’s design will use the existing infrastructure as much as possible, requiring less power and improving the overall output of the plant,” said the Spanish firm in late November, adding that the project would extend Abengoa’s experience in turnkey combined cycle projects to the Jamaican market.

The company informed that it filed for insolvency protection on November 25 before the Mercantile Courts of Seville. The company also indicated that it would continue negotiations with its creditors with the objective of reaching an agreement that ensures the company’s financial viability, “under the protection of Article 5 of the Spanish Insolvency Law”.

The company recorded a €194 million net loss attributable to its parent over nine months ending September 2015 on revenues of €4.87 billion. It holds €6.2 billion in total debt while its earnings before interest tax and amortisation totalled €1.3 billion or 4.5 times net leverage.

Abengoa’s other major combined-cycle projects include the 640MW plant in Centro Morelos, Mexico, and the 440MW combined cycle plant in Portland, Oregon, United States, currently under construction. More recently, Abengoa was awarded two combined cycle plants in Mexico – Nuevo Pemex 680MW, and Norte III, 924MW.

The Gleaner

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Pushing the Caribbean agenda in Paris

December 1, 2015 Webmaster

St Kitts-Nevis PM makes impassioned plea at climate change conference

PARIS, France (CMC) – St Kitts-Nevis Prime Minister Dr Timothy Harris has called on the international community to “negotiate and agree a legally-binding agreement with ambitious emission reduction targets”.

Addressing the 21st Conference of the Parties of the UN Framework Convention on Climate Change (UNFCCC), Harris reiterated the seriousness and urgency of the threat posed by climate change and the need for an ambitious agreement to be reached during the two week conference.

“My delegation calls on all parties here to negotiate and agree a legally-binding agreement with ambitious emission reduction targets. St Kitts and Nevis recommends that all parties subscribe to at least five-year commitment cycles with robust ex-ante review and ex-poste assessment processes.

“We also hope that developed country parties and other parties in a position to do so, would be encouraged to provide support to vulnerable countries, particularly to Small Island Developing States (SIDS).”

He told the conference which is being attended by more than 100 world leaders that his twin island Federation, like other SIDS “has been undergoing many climate related changes; namely sea level rise, extreme weather events, prolonged and severe droughts, and disruption to our reefs, coastlines and agriculture”

Harris said that the dangers of climate change are real and present and that the threat is also existential. He said greenhouse gas emissions from small island states like St Kitts and Nevis are negligible “yet our small island states continue to be adversely and disproportionately affected by the impacts of climate change.

“Nonetheless, as responsible global citizens, we in St Kitts and Nevis are already acting locally to reduce our national carbon footprint even further. The pursuit of renewable energy solutions is now a critical and integral component of our national sustainable development strategy to transform St. Kitts and Nevis into a fully environmentally sustainable small island state.”

Harris said that hi new administration “is incentivizing behavioural changes through the facilitation of duty free concessions on renewable energy technologies.

“We are building strategic partnerships with countries and the private sector to develop geothermal, solar and wind energy solutions. Currently, we have solar farms operating on both St. Kitts and Nevis and are also exploring the potential geothermal capacity on the islands. These renewables will have a significant impact on our energy consumption patterns and reliance on fossil fuels.”

Jamaica Observer

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France and India are launching a global alliance aimed at bringing solar energy to everybody

December 1, 2015 Webmaster

Indian Prime Minister Narendra Modi (L) and French President Francois Hollande (R) shake hands during a news conference at the Elysee Palace in Paris, April 10, 2015. REUTERS/Charles Platiau

Thomson ReutersIndian Prime Minister Narendra Modi and French President Francois Hollande attend a news conference at the Elysee Palace in Paris

PARIS (Reuters) – French President Francois Hollande and India’s Prime Minister Narendra Modi will on Monday launch an international solar alliance aimed at eventually bringing clean and affordable solar energy within the reach of all.

The launch will coincide with a summit of world leaders at the start of two weeks of talks on the outskirts of Paris to seek a new global deal on curbing climate change, by shifting from fossil fuels towards renewable energy.

An Indian government statement on Sunday said there were well over 100 solar-rich countries in the tropics that could be members of the International Solar Alliance to develop clean and affordable solar energy.

“Solar energy is a practical and efficient way to reduce the greenhouse gas emissions,” it said.

Aware of the shadow cast by the failure of the 2009 Copenhagen summit, the last attempt to reach a global climate deal, the United Nations is placing as much weight on the efforts of individual governments as on an overarching U.N. agreement.

More than 180 nations have submitted national action plans, but they are not enough to achieve a goal of limiting global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial times — the cap scientists say is essential to prevent the most devastating consequences of global warming.

India’s national plan focuses on solar, saying it is expected to grow significantly. The aim is to reach capacity of 100 gigawatts by 2022, to be scaled up further in the future.

Firms such as Tata Power have invested heavily in solar as a reliable source capable of delivering power to some of India’s poorest people.

businessinsider.com

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Jamaica set to benefit from IDB Green Bond

November 30, 2015 Webmaster

WASHINGTON, United States (CMC) — Jamaica is the only Caribbean Community (CARICOM) country that will benefit from an Inter-American Development Bank (IDB) multimillion-dollar-funded regional Energy Efficiency Green Bond Facility.

The IDB said that it has approved financing to establish the facility and that the programme was selected to receive up to US$217 million in additional funding as one of eight projects worldwide in the first round of allocations announced by the Green Climate Fund (GCF) earlier this month.

“This private sector programme stands out for its innovative financial approach, involving small and medium enterprises and the potential mobilisation through capital markets of funds from different institutional investors such as pension funds and insurance companies,” said Gema Sacristan, IDB’s Financial Markets Division Chief.

Providing an alternative financing mechanism for energy efficiency projects through the issuance of green asset-backed securities (ABS), the programme will also contribute to the development of capital markets in the region.

The programme will introduce green ABS following the Green Bond Principles standards and will foster socially and environmentally responsible investments.

“The approval of this programme furthers our commitment to supporting Latin American and Caribbean countries in the implementation of their proposed Intended Nationally Determined Contributions (INDCs),” said Amal-Lee Amin, IDB’s Climate Change and Sustainability Division Chief.

“Tapping into domestic capital markets for refinancing of energy efficiency is key for increasing the scale of investment for de-carbonisation over the medium and longer-term.”

IDB said that Mexico will be the first country to implement this programme, followed by the Dominican Republic, Jamaica, and Colombia.

The IDB’s loan of up to US$400 million will be complemented by a loan of up to US$50 million from the China Co-Financing Fund, administered by the IDB, in connection with the first utilisation of the facility in Mexico.

Jamaica Observer

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ESET, JPS Not Worried By Bankruptcy

November 29, 2015 Webmaster

LIGHT AND power providers, the Jamaica Public Service Company (JPS) said yesterday that it is getting independent advice from its lawyers on whether to proceed with a contract with Spanish firm Abengoa to construct its power plant at Old Harbour, St Catherine.

Kelly Tomblin, the chief executive officer of JPS said yesterday that its shareholders held a conference call with Abengoa to discuss the way forward.

Abengoa’s chief executive Santiago Seage resigned yesterday after it emerged the Spanish renewable energy giant was close to bankruptcy.

The JPS, with the assistance of AMEC Foster Wheeler, a consultancy firm, selected Abengoa whose package consists of general electric combined cycle frame 6B gas turbine. The light and power company was in the process of negotiating a performance contract when the matter of the bankruptcy came to light.

“We were never going to enter into a performance contract until we had some assurance about their financial abilities,” Tomblin said.

She said that December 9 was the deadline for Abengoa to satisfy JPS of its ability to undertake the project and hinted that the light and power company is getting ready to move beyond Abengoa.

“Their problem is that they have some debt coming due but they don’t have the cash to pay. They are going to try to utilise their assets and do other things but that takes too long so we won’t be able to wait out that,” Tomblin said.

The Electricity Sector Enterprise Committee, ESET, said that while it is watching the developments, it is not totally concerned at this point.

Profesor Alvin Wint, a member of the ESET, said that in addition to Abengoa, other entities had submitted detailed bids to construct the power plant and they would be in line to be considered to take on the project.

“We will be requiring that they move quickly and if they need to go to a plan B they go quickly,” Wint said.

Both major shareholders of JPS, Marubeni and Korea East West Power Company Limited have committed to each inject up to 50 per cent of the approximately US$990 million equity that is required to develop the 190 megawatt power plant by year end.

The JPS intends to raise approximately US$210 million in debt funding to help finance the project.

The Gleaner

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