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Coalition urges action to phase out fossil fuel subsidies

December 7, 2015 Webmaster

Members of the Jamaican delegation to COP21 at the Wider Caribbean Pavilion (from left) Ambassador Sheila Sealy Monteith, under secretary for the Multilateral Affairs Division at the Ministry of Foreign Affairs and Foreign Trade; Vilma McNeish, ambassador to the Kingdom of Belgium and the European Union; Senator Arnold J Nicholson, minister of foreign affairs and foreign trade; Dr Orville Grey, senior technical officer in the Ministry of Water, Land, Environment and Climate Change; and Jeffrey Spooner, head of the Meteorological Service of Jamaica.

PARIS, France — An unprecedented coalition of close to 40 governments, hundreds of businesses and influential international organisations have called for accelerated action to phase out fossil fuel subsidies, a move that would help bridge the gap to keep global temperature rise below 2°C and perhaps close to the 1.5°C for which Caricom and other Small Island Developing States are advocating.

On the opening day of the UN Conference on Climate Change (COP21) last week, New Zealand Prime Minister John Key formally presented the Fossil Fuel Subsidy Reform Communiqué to Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), on behalf of the Friends of Fossil Fuel Subsidy Reform, The Prince of Wales Corporate Leaders Group and other supporters of the communiqué.

The communiqué calls on the international community to increase efforts to phase out perverse subsidies to fossil fuels by promoting policy transparency, ambitious reform and targeted support for the poorest.

Governments spend over $500 billion of public resources a year to keep domestic prices for oil, gas and coal artificially low. Removing fossil fuel subsidies would reduce greenhouse gas emission by 10 per cent by 2050. It would also free up resources to invest in social and physical capital like education, healthcare and infrastructure, while levelling the playing field for renewable energy.

“Fossil fuel subsidy reform is the missing piece of the climate change puzzle,” Prime Minister Key said. “It’s estimated that more than a third of global carbon emissions, between 1980 and 2010, were driven by fossil fuel subsidies. Their elimination would represent one-seventh of the effort needed to achieve our target of ensuring global temperatures do not rise by more than 2°C. As with any subsidy reform, change will take courage and strong political will, but with oil prices at record lows and the global focus on a low carbon future, the timing for this reform has never been better.”

In accepting the communiqué, Figueres said: “These subsidies contribute to the inefficient use of fossil fuels, undermine the development of energy efficient technologies, act as a drag on clean, green energy deployment and in many developing countries do little to assist the poorest of the poor in the first place.

“The huge sums involved globally could be better spent on schools, health care, renewable energies and building resilient societies. The current, very low oil prices are a good opportunity to really get going on this issue.”

Chair of The Prince of Wales Corporate Leaders Group (CLG) and former president of Alstom Power, Philippe Joubert, also spoke last Monday.

“The CLG’s long-standing efforts to put a price on carbon, including most recently working with the World Bank through the Carbon Pricing Leadership Coalition, will soon deliver results. It doesn’t make sense that, at the same time, governments artificially deflate the cost of coal, oil and gas, the primary cause of GHG emissions. Fossil fuel subsidies must be ended to stop this contradiction and enhance a real transition to low carbon energy,” he said.

For the OECD’s part, Secretary-General Angel Gurría commented that countries need to demonstrate their seriousness about combating climate change with concrete actions and policies.

“Reforming harmful fossil-fuel support is a good place to start,” Gurría stressed.

Close to 40 countries have endorsed the Fossil Fuel Subsidy Reform Communiqué, including Canada, Chile, France, Germany, Italy, Malaysia, Mexico, Morocco, Peru, The Netherlands, The Philippines, Samoa, the United Kingdom, the United States, Uganda, and Uruguay.

The communiqué is supported by The Prince of Wales’s Corporate Leaders Group (23 global companies employing two million people worldwide with combined revenues exceeding US$170 billion) and other business organisations working with thousands of corporations and investors, including The B Team, the World Business Council for Sustainable Development and the We Mean Business coalition.

The communiqué has also been endorsed by influential international organisations, including the International Energy Agency, the OECD and the World Bank.

Eliminating fossil fuel subsidies can accelerate the economic shift needed to tackle climate change and remove one of the obstacles to delivering the low-carbon future for which COP21 is aiming.

“History will prove fossil fuel to be a dead end,” Stefan Löfven, prime minister of Sweden, said. “Sweden will be amongst the first fossil-free welfare nations of the world. And eliminating fossil fuel subsidies is an important step on this path.”

Hakima El Haite, Morocco’s environment minister and candidate for the presidency of COP22, added: “Not only do fossil fuel subsidies put a strain on government coffers but they also don’t help the poorest of society.”

COP21 began on November 30 and will run until Friday, December 11.

Jamaica Observer

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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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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

Electricity JPS LNG News

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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JPS 190MW Plant A US$300m Project – LNG Facility Won’t Harm Health Or Fish Stock, Residents Assured

November 28, 2015 Webmaster

The JPS power plant in Old Harbour Bay, St Catherine. Ian Allen

Continuous tests as well as monitoring of the construction and commercial operation of the gas-fired 190-megawatt power plant to be developed by Jamaica Public Service Company (JPS) at Old Harbour Bay, St Catherine, have been promised, amid public concerns that the facility could eventually become a health hazzard.

Those health concerns were allayed by environmental consultant Carlton Campbell, who also assured the community in a consultation session Tuesday that they would have a mechanism for complaints for matters that arise when the project gets underway.

The public is weighing in on the environmental impact assessment report, which was done by Campbell’s company, CL Environmental Limited.

Such consultations are a precursor to final consideration and approval of a major project by the central authority, National Environment and Planning Agency (NEPA).

Site preparation for the liquefied natural gas plant is scheduled to begin by the first quarter of 2016 and construction by the second quarter. Commissioning of the plant is expected 22 months later, which would be close to mid-2018 if the current timetable holds.

JPS recently settled on Spanish engineering and renewable energy firm Abengoa to develop the plant, but that selection is now complicated by bankruptcy filings by the company on Wednesday, which is seeking protection in order to restructure its debt of about €9 billion. Spanish law gives it four months to strike deals with creditors under ‘pre-insolvency’ proceedings and avoid full bankruptcy.

The size of the contract to Abengoa was not disclosed, but previous reports say the project could cost around US$200 million to US$300 million. CL’s environmental impact report indicates that capital expenditure for construction of the plant is US$219.5 million, but last night JPS clarified that this figure related to equipment only. The utility said the full project cost would end up closer to US$300 million.

Deliver power supplies

The new plant will retire old capacity at Old Harbour, and is expected to deliver power supplies to the national electricity grid at less than 13 US cents per kilowatt-hour. The current plant is oil-fired.

Old Harbour residents were told to expect intermittent traffic disruptions and longer commutes, as well as increases in the cost of travel once the 190MW project enters the construction phase.

Campbell said the expected noise levels were compliant with the night and daytime standards of NEPA and the World Bank, and that water and air quality as well as drainage and wastewater systems would be monitored continuously.

“There is a perception that there will be health implications from this new plant,” said Campbell, while ticking off a list of reported concerns that included respiratory problems, increased noise levels, pollution, vibration and soot emissions.

However, he said, a health impact study was conducted which showed that residents would not be affected.

The environmental consultant also said the natural gas emissions and effluent released from the plant were not expected to harm the fish stock on which a lot of residents of the village depend for their livelihood.

The plant is expected to employ 400-450 during construction, and 45 persons permanently at commissioning.

The project was submitted to NEPA for approval on September 2, 2014, and after initial review, the agency requested that JPS produce an environmental impact report. The report was submitted at the end of October and is under review by various agencies.

Their feedback will eventually be communicated to JPS.

“The agencies will therefore refrain from making any comments or answering any questions in relation to the development at this time, as the application is currently the subject of review,” said NEPA official Ruth-Ann Lacey-Sherrard at Tuesday night’s public consultation.

The presence of the agencies at the event, she said, was merely to observe and take note of public comments that would inform the deliberations of the Natural Resources Conservation Authority (NRCA) which is a division of NEPA.

“Please note, carefully, that the final decision on the application is the sole responsibility of the NRCA,” Lacey-Sherrard said.

“The agencies’ review of the public presentation and consultation processes is extremely important in the decision-making process. These consultation processes provide an additional opportunity for stakeholders to air their concerns, make comments, provide opinions and views on the development project, and afford the applicant the opportunity to address these,” she said.

The Gleaner

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With question mark over Abengoa…

November 27, 2015 Webmaster

JPS to open discussions with other renewable vendors

The Jamaica Public Service (JPS) yesterday announced that it will be engaging in discussions with other renewable vendors to ensure execution of the planned energy 190 MW Power Plant in Old Harbour, St. Catherine.

Chief Executive Officer, Kelly Tomblin in a press release advised the public that Spanish renewable energy and engineering firm Abengoa has filed for protection from creditors – an initial step towards filing for bankruptcy. The company was recently announced as the preferred bidder to construct the combined-cycle plant in Old Harbour.

“While JPS notes the development with regret, it is fully prepared to activate its alternative plans to ensure the execution of the project, which will replace the present Old Harbour Bay Power Station, while adding more Liquefied Natural Gas to the country’s energy mix,” Tomblin stated.

“We will be having dialogue with Abengoa — but JPS remains undaunted by the news. As a responsible corporate entity, our company has been in full preparation mode for any type of challenge regarding the completion of this project. We will not be derailed from our mission to bring real change to the energy sector and by extension, to Jamaica,” she continued.

The CEO reportedly stated that JPS has been eyeing other vendors since the announcement of the Abengoa’s financial situation.

Abengoa, which reported debt of ¤8.9-billion in its third quarter financials, began bankruptcy protection proceedings to avoid what could be one of Spain’s largest insolvencies.

The figure could be doubled when including ¤2.1 billion in funds it owed to suppliers and ¤5.9 billion of debt the company has in subsidiaries it said could potentially be sold. According to reports, the company has filed for protection from creditors with hopes of reaching a deal on its debts by March.

According to Tomblin, Abengoa was selected based on its wide ranging and impressive technical expertise. The company has been touted as one of the world’s top builders of power lines transporting energy across Latin America and a top engineering and construction business, making massive renewable-energy power plant.

The light and power company also had the understanding that Abengoa’s financiers were committed to the company for the long term.

“JPS wishes to assure its customers and all stakeholders that the 190 MW project remains on track for the plant’s commissioning in 2018.The Company will keep stakeholders informed as events unfold,” she said.

Jamaica Observer

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Pot Can’t Call The Kettle Black, JPS Says It Won’t Jump The Gun On Abengoa Bankruptcy Proceedings

November 26, 2015 Webmaster

Although Abengoa, the Spanish company selected as the preferred bidder to build a major power plant in Jamaica, has initiated steps that could lead to a bankruptcy declaration, Jamaica Public Service Company CEO Kelly Tomblin is not yet ready to call it quits on the multinational corporation.

Reacting to news of the bankruptcy proceedings initiated by Abengoa, Tomblin said she was monitoring the situation of the Spanish renewable-energy company.

It was only last week that JPS announced Abengoa as the preferred bidder to build the 190-megawatt combined-cycle plant in Old Harbour, St Catherine.

Despite fears that Abengoa may not be able to fulfil the requirements of the bid, given its precarious financial situation, Tomblin is holding out hope that the company will be able to make good on its financial obligations in relation to the bid.

“We have been monitoring the situation for some time. We have backup plans, but we have to wait and see what Abengoa shows us. But pot can’t call kettle black because JPS, as you know, has had its own financial difficulties, and we are just now emerging from those, so we know what it’s like, so we want to make sure that we don’t overreact,” Tomblin told The Gleaner last evening.

In the event that Abengoa folds completely, Kelly Tomblin pointed out that JPS has several alternatives.

“There are other vendors. We have many vendors who were poised to build the plant, so if, in fact, Abengoa can’t show, then other people can build the power plant. As you know, we have shareholders who have deep expertise, but we don’t want to jump the gun. Of course, Abengoa will have to give us financial assurance, but, again, pot can’t call the kettle black. It wasn’t very long ago that JPS, too, was facing insolvency problems,” she said.

Energy Minister Phillip Paulwell, in reacting to the news, said there was no need to panic and that JPS should be given the space to continue the procurement process.

When asked if the situation vindicates him in respect of the Energy World International (EWI) bid, Paulwell said, “There will be vindication when the gas is here because that, for me, is the most important aspect.”

Paulwell was in charge of overseeing the Government’s 391-megawatt project, which awarded a bid to EWI, a company which faced financial woes, leading to questions about its ability to deliver on the bid. This was before responsibility for the project was handed over to the Vin Lawrence-led enterprise team.

Now, with news of Abengoa’s bankruptcy filing, Jamaica’s renewable-energy plans may be delayed yet again.

Abengoa’s latest financial woes sent shockwaves through the banking sector and financial markets in Spain yesterday, fuelling concerns that the country’s lenders may be left with heavy losses.

According to international media reports, Abengoa has been having financial challenges from as far back as 2013, when Spain instituted energy reforms, which reduced subsidies to renewable-energy providers. This affected Abengoa’s capital base significantly and further exacerbated its pile-up of debt.

The Financial Times has said that a possible default by Abengoa could count as the largest bankruptcy in Spanish history, given that as of September, Abengoa carried gross debt of £8.9 billion.

The filing for preliminary creditor protection yesterday came after a potential investor cancelled plans to inject £350 million into the company.

While he could not comment on questions of whether due diligence was done on the Abengoa bid, Private Sector Organisation of Jamaica CEO Dennis Chung said news of the filing does not mean the company will go under, as bankruptcy proceedings often give a company an opportunity to rebuild.

“I couldn’t comment on due diligence. I have to believe that proper due diligence would have been done, so that question should be put to the person who actually did the due diligence,” Chung said.

The Gleaner

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UPDATE 3-Spain’s Abengoa starts insolvency proceedings, shares dive

November 25, 2015 Webmaster

* Abengoa has 4 months to reach deal with creditors

* Shares plummet 54 pct, bonds virtually worthless

* Abengoa’s bankruptcy would be Spain’s largest on record (Adds Abengoa removed from Ibex, details on company)

MADRID, Nov 25 Spain’s Abengoa started insolvency proceedings on Wednesday after a potential investor said it would not inject fresh capital into the energy firm, sending its share price tumbling by 54 percent.

Under Spanish law, companies can enter into pre-insolvency proceedings, giving them up to four months to reach an agreement with creditors to avoid a full-blown insolvency process and a potential bankruptcy.

Failure by Abengoa to reach such a deal could lead to Spain’s largest bankruptcy on record. The company employs around 24,000 people worldwide.

Spanish and international banks’ total exposure to Abengoa stands at around 20.2 billion euros ($21.4 billion), including financing for projects, a source familiar with the matter said at the end of September.

The Seville-based engineering and renewable energy firm, which has biofuel and solar-heated power plants in the United States, has been struggling for a year with high debts but the situation became unsustainable in July. It first cut its 2015 targets and stepped up an asset sales plan on July 31, only to announce a share issue days later.

Since then, the company’s market value has tumbled by around 85 percent, hit by uncertainties over whether creditor banks would agree to back the issue.

The shares plummeted by 69 percent when trading resumed following a more than three-hour suspension on Wednesday morning. They closed down 54 percent, wiping out around 470 million euros in market value on the day.

The stock market operator said Abengoa would be removed from Spain’s blue-chip index Ibex as of Nov. 27.

Bonds also lost most of their value.

Abengoa earlier confirmed that Gonvarri, a unit of privately-held industrial group Gestamp, had backed away from a plan to inject around 350 million euros into the firm.

“The company will begin the negotiating process with its creditors with the aim to reach an accord to guarantee the financial viability under the Article 5 of the Bankruptcy act, which the company intends to request as soon as possible,” Abengoa said in a statement.

Abengoa has been trying to find new investors since early August, when it announced a 650 million euro rights issue of new shares to cut gross debt of some 8.9 billion euros.

Gonvarri’s interest was conditional on banks underwriting the issue and it had asked the banks to inject 1.5 billion euros in to the company, sources told Reuters late on Tuesday.

Earlier this month, Abengoa’s auditor Deloitte said the group faced significant risks and its future depended heavily on the proposed investment deal with Gonvarri.

https://solarbuzzjamaica.com/jps-announces-preferred-bidder-for-old-harbour-plant/

Reuters.com

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JPS Announces Preferred Bidder For Old Harbour Plant

November 20, 2015 Webmaster

The Jamaica Public Service Company Limited (JPS) has announced the selection of Spanish firm Abengoa as the preferred bidder to build the 190 megawatt Combined Cycle plant in Old Harbor, St Catherine.

The announcement follows the approval by the Electricity Sector Enterprise Team for the company to start negotiations with US-based New Fortress Energy for the supply of natural gas to the plant.

The JPS says once contracted, Abengoa will be responsible for the design, engineering and construction work on the plant.

It will be built close to company’s existing power station in Old Harbour Bay.

The JPS says it is in the process of procuring the necessary permits for the construction of the plant.

It says as part of its public education, it has shared the Environmental Impact Assessment on its website and will host a public consultation meeting next Tuesday in Old Harbour Bay.

The JPS says the gas terminal and the new gas-fired power plant will allow it to retire 220 megawatts of existing oil-fired steam generation units at Old Harbour and Hunts Bay in 2018.

It says this will ultimately result in a reduction of over 1.2 million barrels of oil per year and allow for power generation below 13 United States cents per kilowatt hours.

The Gleaner

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