James McNish,
The Opposition spokesman on energy, Gregory Mair
Charlene Stuart, Senior Staff Reporter
The Opposition spokesman on energy, Gregory Mair wants the Prime Minister to immediately clarify her government
Dr Carlton Davis, head of the LNG steering committee.Ian Allen / Photographer
Lower energy prices up in the air!
The Government‘s long-announced plan to introduce liquefied natural gas (LNG) as one measure to reduce electricity rates remains in limbo with no clear indication, when, or if, this will take place.
The proposed 2014 timeline will not be met and the man leading the process, Dr Carlton Davis, is not committing himself to a new timeline.
“We will soon know the full truth,” Davis told a recent Gleaner Editors’ Forum as he noted that the State is now ready to start negotiations with Samsung, which has been selected to construct the LNG infrastructure locally.
“We have just about completed the process of looking at the price quotations of the liquefied gas and within another couple of weeks we will determine whether the whole thing makes senses and if it makes sense how fast we move on it,” said Davis.
Under the original plan supported by successive administrations, LNG would be added to the country’s fuel mix, replacing oil to sharply reduce the country’s energy bill while lowering the price of electricity to consumers.
The plan was made on the assumption that the Jamaica Public Service Company (JPS) would construct a new 360 megawatts power plant in Old Harbour Bay, St Catherine, by 2014.
The JPS has indicated that the plant should be up and running by 2014, but recent concerns from potential financial partners have left a cloud around that project.
The company is also yet to say if it will proceed with the building of the new plant if the Government fails to deliver LNG.
price discussion
Last Thursday, the Government’s technical team reviewed the proposals for the supply of the gas and this week, the LNG steering committee will meet to discuss the price of the gas before making a recommendation to the Cabinet.
“We have the quotations for the infrastructure, we have the quotations for the price of the LNG … there are financial security issues … all these put together will give us a pretty good idea of where we are, then we will meet (and make a decision),” Davis told the Editors’ Forum.
“Issues as to whether we are going to abandon that path wholly or partially will be determined. The real question is whether the JPS will find the price that (the LNG) comes out to at a sufficient comfort level … to give the public a price of electricity that is much lower than they currently pay,” added Davis.
If LNG can be sourced at an acceptable price, the JPS could reduce the fuel cost to its customers by approximately 40 per cent.
According to Davis, “Circumstances will dictate where we go from here. As I said, in just a matter of days we will know what sort of game is on, if a game is on in a certain direction.”
However, despite the price concerns which could derail the project, Davis did not comment on the Government’s decision to select Samsung as its preferred bidder to do the LNG infrastructure when its offer was higher than the bid entered by EXMAR.
The former head of the Government‘s liquefied natural gas (LNG) steering committee Chris Zacca, is downplaying the impact of the extended delay in the introduction of this product to the country’s fuel mix.
Zacca, who now heads the Private Sector Organisation of Jamaica, told a recent Gleaner Editors’ Forum that criticisms about the State’s slow movement on this critical matter are unfounded.
“I have made the point consistently that if you had all the LNG in the world today, you would have to burn it in your stoves at home because there is nowhere to burn it, so you have to combine your schedule to their (the Jamaica Public Service Company’s) schedule to build a new power plant,” said Zacca.
Without that generating plant there is no project, so the delays are not an issue,” added Zacca.
For years the price of LNG was a fraction of the price of oil, but with increased demand for natural gas in recent years the price has started to increase, with a recent Morgan Stanley research document showing the price at December 2011 more than double what it was in December 2010.
LNG was priced at approximately 50 per cent of oil in 2010.
“Our problem with fuel in this country has resulted … from us trying to make the best be the enemy of good. If we had moved 10, 12 years ago to a new fuel solution, whatever it may have been, even though it might not have been perfect at the time by, now we would have been way ahead of the game,” said Zacca.
According to Zacca, “LNG is not going to come in, no matter what way you do it, at a fraction of the cost of oil. I think, if we are lucky, we can get it 20 per cent below the current price (of oil).”
http://jamaica-gleaner.com/gleaner/20120819/lead/lead6.html
