Key players in the private sector have signalled that they want to be given a role in the new arrangement for the establishment of
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
GOVERNMENT is giving US$7 million (approx J$630 million) in revenues to the Russian-based aluminium producer UC Rusal, under a one-year waiver of the bauxite levy, Energy Minister Phillip Paulwell announced yesterday.
The minister, who was speaking at yesterday’s Jamaica House press briefing at the Office of the Prime Minister in Kingston, said the concession was a win-win situation for all.
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“If we didn’t do that I believe the scenario would be quite different today. We wouldn’t have the US$7 million, plus we wouldn’t have the 600 jobs or the production,” Paulwell said.
“We (Jamaica) are now going to be part of the base location for UC Rusal and we will no longer be affected by the swing of supply and demand,” Paulwell said.
He told reporters that a similar deal would have kept the Kirkvine plant in Manchester open if it was not rejected by the previous administration. “In 2010 a similar approach was made to the then government and it was not pursued and that plant is still closed today,” Paulwell said.
It was not immediately clear what proposal was put to the former Jamaica Labour Party Government by the bauxite giant and what was put on the table by the then administration.
In the meantime, Minister Paulwell said no deal has been struck with UC Rusal for its other two plants — Alpart and Kirkvine — because the Government had no sweeteners to offer. “For three years Kirkvine and Alpart have been closed, so there is no levy concession to offer as a sweetener because right now they are not paying anything,” Paulwell said.
The minister announced in Parliament Tuesday that the Government had signed a concessionary agreement to waive the bauxite levy on UC Rusal’s operation at Ewarton, St Catherine from October 1, 2012 to September 30, 2013. He said, too, that an agreement was reached for the employment level at the plant to remain at the current 600 jobs during the period of the concession.
UC Rusal, Paulwell announced, would be investing US$100 million (J$9 billion) in the facility for the construction of a coal-fired electricity-generating plant. Construction is expected to begin next year and earmarked for completion in 2015.
“We wanted a similar definitive timeline for Kirkvine and Alpart, but we are some distance away as it relates to our position and theirs, and that is why the negotiations continue and by the end of November I will report to the country,” he said. Both plants, he said, would also need to have an energy solution as this will help in the creation of more jobs.
“We are seeing with the coal plant at Ewarton, 800 jobs being created, and so if a similar approach is adopted then even before the refinery is established you can have jobs being created by virtue of the energy transformation that has to take place,” he said.
The Government, he said, has given its support to the company to pursue energy options in accordance with the country’s National Energy Policy as well as local environmental standards.
He announced that Cabinet has also authorised negotiations for the sale of the Government’s seven per cent shares in Windalco. He said these negotiations should be completed in November.
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MONTEGO BAY, St James – TOURISM and Entertainment Minister Wykeham McNeill has challenged stakeholders in the sector to augment alternative energy supply sources and expand the use of supporting energy in a collaborative effort to keep the industry buoyant.
“As a sector, I am encouraging all our tourism partners to do what you can incrementally and over time to expand your energy options and increase your use of sustainable energy,” McNeill charged.
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Sandals Resorts International (SRI) Director of Administrator and Business Processes, Wayne Cummings (left) and Tourism Minister Wykeham McNeill are locked in discussion following World Tourism Day Luncheon held at Sandals Montego Hotel, last week. (Photo: Kenroy Pringle) |
“I want to encourage our tourism sector partners to seriously explore the use of alternative and sustainable energy sources, in our collective efforts towards the future sustainability of the tourism industry“.
Meanwhile, former President of the Jamaica Hotel and Tourist Association (JHTA) Wayne Cummings noted that for a downward trend in energy costs to be realised, an energy policy would have to be written, “agreed to, and we all stick to it”.
“So we need to figure it out and make it known to everybody,” Cummings argued.
Cummings, who is also the Sandals Resorts International (SRI) director of administrator and business processes, was speaking during a World Tourism Day Luncheon held at the Sandals Montego Hotel, where McNeill, Junior Minister in the Ministry of Tourism and Entertainment Damion Crawford and other tourism officials, were in attendance.
Prior to the luncheon, the party toured a villa at the resort in which suites are fully powered by solar technology, allowing for the harnessing and storing of energy to power sections of the resort’s operation, through a pilot project undertaken jointly with Panasonic.
Paul Grey, head of ATL Energy and Engineering, said with the US$100,000 investment, savings of up to US$120,000 could be realised within a decade.
In the meantime, conceding that the cost of establishing alternative energy sources will be costly at the beginning, the tourism and entertainment minister also underscored the need to retrofit, among other solutions.
“We have entities of varying sizes and I realise the initial costs involved may seem daunting, but it may be that you need to retrofit your bulbs, install solar panels, implement waste water management systems plus a myriad of other solutions,” McNeill noted.
He further noted that energy strategies should form a major plank of each entity’s Environmental Management Policy.
“So today (Thursday) is a good time to once again seriously consider plans to implement energy solutions in a manageable form that will allow you to monitor the performance and provide real readings on the effect on your bottom line,” McNeill remarked.
“Let each and every one of us play our part in ‘Powering Sustainable Development‘ to the benefit of our sector, our society and nation at large”.
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The Government, or elements thereof, apparently felt it to be smart politics to allow weeks of confusion and speculation about liquefied natural gas (LNG) in Jamaica’s energy future. Such uncertainty, this mode of political communication presumes, dampens expectations and softens up the public for accepting less than what was initially promised.
So, the Government has announced that it isn’t abandoning natural gas, only that its introduction will now be driven by the light-and-power company, Jamaica Public Service (JPS).
JPS will build its planned 360-megawatt gas-fired power plant and promote an LNG storage and regasification facility as well as procure the LNG.
Essentially, having deemed Samsung’s bid for the LNG project would not cut the price of energy deeply enough to make a substantial difference to the Jamaican economy, the Government has withdrawn itself from promoting the venture.
The Government could have avoided the drama of recent weeks by being open and frank with the Jamaican people. We, however, have no fundamental problem with the new strategy. Maybe if the Government gets itself out of the way, then something positive will happen for energy, giving the economy a fighting chance.
Our broad support notwithstanding, we believe that there remain areas for clarification in Energy Minister Phillip Paulwell’s statement which, unfortunately, were not tested by MPs after his presentation to Parliament on Tuesday.
The first, and most apparent, of these is the scope of the project for the LNG to be promoted by JPS and its parent firms, Japan’s Samsung and East West Power of South Korea.
The original project on which the Government invited bids was for an LNG facility to handle 800,000 tonnes of fuel a year. Of this amount, JPS’s requirement would be around 250,000 tonnes, or 31 per cent.
The other presumed offtakers would be the alumina refiner Jamalco, with 350,000 tonnes or approximately 44 per cent of the total volume, and Jamaica Private Power, with 200,000 tonnes or 25 per cent. It was on these volumes, and acquisition of LNG at an appropriate price point, that the widely anticipated 30 to 40 per cent reduction in the cost of energy was predicated. Minister Paulwell said it will be delivered.
No strong commitment
However, with a project delivery deadline of 2015, we do not have the sense that there is any firm commitment by Alcoa to a deal with JPS, or that there is yet any substantial discussion between the parties. Jamalco, 55 per cent owned by Aloca, operates in a very competitive global market where Jamaica is in the second half of the efficiency table of alumina refiners. Alcoa has insisted on very specific price benchmarks if it is to join the LNG pool.
An obvious question, therefore, is what would happen to the project if an offtaker representing nearly half of the LNG requirement was not on board. This would seem to have implications for the price at which energy would be delivered.
Further, Mr Paulwell appears to have not much more than verbal undertakings from JPS to undertake the project and lower the price of electricity by at least 30 per cent. At some point, this will be put in writing.
But the minister suggested that regulatory oversight by the Office of Utility Regulations will not extend to pricing. That demands clarification.
It would make sense if, at this stage, the Government publish all the documentation on the LNG project.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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Phillip Paulwell addresses the media at a Jamaica House media briefing on October 3. – Norman Grindley/Chief Photographer
Minister says plan to get other players into the electricity sector still on track despite LNG deal
Arthur Hall, Senior News Editor
Energy Minister Phillip Paulwell has underscored his intention to break up the Jamaica Public Service‘s (JPS) monopoly on the transmission and distribution of electricity, even as concerns grow that the company has been given a greater control of the sector.
Several concerns have been aired since Tuesday when Paulwell announced that the Government has decided – as reported by
THE Government says that it is withdrawing from the fuel source selection process to focus on creating a legislative and regulatory energy framework this fiscal year.
However, Minister of Science, Technology, Energy and Mining Phillip Paulwell told the House of Representative yesterday that the Government has not abandoned plans to introduce Liquefied Natural Gas (LNG) into Jamaica by 2015.
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Minister of Science, Technology, Energy and Mining Phillip Paulwell |
He said that plans are well advanced for the introduction of LNG, but given the result of the bidding process, the Government has determined that it has taken the matter as far as it can go. He added that it was also the Government’s view that private electricity and alumina producers would have much more flexibility in procuring fuel supplies and use their international leverage to get the best possible prices.
However, “as a Government, we (will) continue to support and facilitate private investors as we work together to achieve the best possible solutions,” Paulwell said.
He stated that the LNG committee will be immediately disbanded and replaced with a body that includes members of the Jamaica Energy Council, the Office of Utilities and his ministry.
“With the termination of the work of the LNG steering committee, there will be no need to access the remaining US$2.6 million that was originally budgeted,” he explained in reference to the fact that the Government has already spent US$2.8 million of the US$5.4-million proposed budget for the LNG project.
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THE Government says that it is withdrawing from the fuel source selection process to focus on creating a legislative and regulatory energy framework this fiscal year.
However, Minister of Science, Technology, Energy and Mining Phillip Paulwell told the House of Representative yesterday that the Government has not abandoned plans to introduce Liquefied Natural Gas (LNG) into Jamaica by 2015.
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Minister of Science, Technology, Energy and Mining Phillip Paulwell |
He said that plans are well advanced for the introduction of LNG, but given the result of the bidding process, the Government has determined that it has taken the matter as far as it can go. He added that it was also the Government’s view that private electricity and alumina producers would have much more flexibility in procuring fuel supplies and use their international leverage to get the best possible prices.
However, “as a Government, we (will) continue to support and facilitate private investors as we work together to achieve the best possible solutions,” Paulwell said.
He stated that the LNG committee will be immediately disbanded and replaced with a body that includes members of the Jamaica Energy Council, the Office of Utilities and his ministry.
“With the termination of the work of the LNG steering committee, there will be no need to access the remaining US$2.6 million that was originally budgeted,” he explained in reference to the fact that the Government has already spent US$2.8 million of the US$5.4-million proposed budget for the LNG project.
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