Investors willing to pump capital into renewable energy projects in Jamaica won’t have to make a one per cent downpayment when making their bids to the regulator.
In stead, they will have to submit the proposal security of one per cent of the total project cost to the Office of Utilities Regulation (OUR) after their project has been given the greenlight.
KINGSTON, Jamaica
Energy minister Philip Paulwell yesterday announced a counterintuitive measure that will delay the vetting of new power plant proposals in order to fast-track their approval.
The electricity regulator Office of Utilities Regulation (OUR) will now advise Paulwell on the acceptance or rejection of proposals by March 30 instead of the original month-end deadline.
The extension saves these projects from a lengthy retendering which could last years. Such a delay would stall plans to slash the island’s high energy costs while threatening future blackouts.
“I have enabled them with a further period of time to the end of March to do their contemplation. They have received from JPS (Jamaica Public Service Company), and others, new proposals and they wish to study them carefully because the OUR and myself agree that time is of the essence, and we do not want to lose any more time – because the decision has to be taken now,” said Paulwell on Tuesday at the Jamaica Chamber of Commerce forum on energy in Kingston.
“And rather than start the whole process again, once there is a prospect of pursuing a path of lower electricity prices, we want to implement it quickly,” he said.
JPS, the monopoly power distributor, submitted a proposal that incorporates an undisclosed fuel source as an alternative to its 360-megawatt natural gas plant, but the OUR requests additional information.
Approving these plants would usually result in public procurement of a fuel supplier which could take months or years. Paulwell would obviate this process via parliamentary approval.
“You could treat a proposal as an unsolicited offer, at which time, the Government can sign off on it and forego the need for procurement,” he explained.
The OUR will allow JPS until Friday, March 15 to submit details of an alternative proposal for provision of electricity-generation capacity. This was in response to a letter, containing a broad summary of its latest offer, sent on Thursday, January 31 by the JPS.
“The JPS and its stakeholders had missed its deadline of Wednesday, January 30 to complete the requirements under the request for proposal (RFP) for the 360MW project, and so the alternate proposal could not have been considered within the context of the RFP,” said the OUR in a media release on Tuesday.
The OUR said several other companies have expressed interest since the termination of the RFP process. Those companies also have until March 15 to “concretise” unsolicited submissions into firm proposals.
The OUR release stated that JPS missed another deadline granted to facilitate the provision of project details, including pricing and supplier.
“This was the third extension granted by the OUR to JPS … . They were given until January 30, 2013 to complete the outstanding matters relating to the bid,” said OUR.
In late 2011, JPS was awarded the right to construct a 360MW plant, which followed the issuance of an RFP from the OUR. The plant was supposed to be the largest of a planned 480MW programme.
The 360MW would have replaced old power plants with units fired by cheaper fuel, and add new capacity to the grid to maintain pace with the national energy demand.
steven.jackson@gleanerjm.com
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Daraine Luton,
The Office of Utilities Regulation (OUR) last night opened a window of opportunity for firms wishing to submit proposals for a new electricity generating plant that would use liquefied natural gas (LNG) as its main fuel source.
According to the regulator, it will complete its review of the current proposal by the Jamaica Public Service (JPS) and other expressions of interest by the end of next month.
“Following the completion of this review, the OUR will formulate an opinion as to the feasibility of the offers and advise the Government whether it is worthwhile to proceed to finalise negotiations with any of these companies, including JPS,” the State agency said in a news release.
“This gives all entities which have expressed an interest, including JPS, a window of opportunity for a review of their proposals before the OUR returns to the market, if necessary,” the regulator said.
“The OUR will then await Government’s decision whether to sole source the project, which seems most feasible by way of readiness and also achieves the overall objective of reducing electricity prices in the shortest time. If such a project cannot be identified, then the OUR will go back to invite public tender,” it added.
The decision comes after the OUR, on February 1, informed the JPS and its shareholders that it had terminated the request for proposal (RFP) process in relation to the 360 MW project.
The OUR said it ended the process after JPS missed a third deadline on January 30 to complete the requirements under the RFP for the 360 MW project and had requested a 30-day extension.
But the JPS explained that the project scope changed significantly since 2011 when it was granted approval to proceed with construction of the plant.
“JPS’ role initially was simply to construct the plant, but late last year the company was asked to take on the additional responsibility of identifying a supplier and managing the process of procuring the LNG,” the light and power company’s President and CEO Kelly Tomblin said, adding that JPS has not participated in fuel procurement in the past.
Tomblin said that, despite her company’s best efforts, the market is not supporting earlier estimates of LNG prices as low as $8.50 mmbtu. “We have received indicative prices of upwards of $12.50 mmbtu for LNG and the related infrastructure, which we estimate would result in a reduction of approximately 20 per cent in electricity costs,” she explained.
Last night, the OUR said it has given JPS until Friday, March 15, to submit details of an alternative proposal for provisioning of electricity generation capacity.
“This was in response to a letter, containing a broad summary of its latest offer, sent on Thursday, January 31, 2013 by the JPS,” the OUR said, adding that it has advised the responsible minister of this process and he is in concurrence.
The OUR said that several other companies have expressed interest in providing electricity (generation capacity) since the termination of the RFP process.
“Those companies have also been given until March 15, 2013 to concretise their unsolicited submissions into firm proposals,” the regulator said.
“A meeting was held with JPS, following which the OUR informed the company that it would be allowed to submit the details of what is now considered an unsolicited proposal. The OUR will only entertain firm proposals in a state of readiness to be finalised with minimal negotiations. The proposals must be to provide electricity only and must be accompanied by the relevant fuel supply and other financing agreements,” the regulatory agency said.
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Arthur Hall, Senior News Editor
An American firm hoping to spend US$700 million (J$65 billion) to set up waste-to-energy plants in Jamaica could walk away from the project.
Green Waste Energy says while it has not yet given up on Jamaica, it is becoming frustrated.
President of Green Waste Energy, James D Burchetta, says the infrastructure in Jamaica does not encourage investment in renewable energy, especially from waste.
Green Waste Energy had proposed to spend the billions of dollars to construct four processing plants across the island to transform the waste from the island’s dumps into electricity.
This would be in keeping with the efforts by the Government to have 115-megawatts of renewable energy added to the national grid by 2015.
The four plants would create approximately 1,700 full-time jobs and 1,000 jobs during construction pumping millions of dollars in the economy.
Last week, Burchetta expressed concern about the process to get the approval to construct the plants and the absence of a tipping fee for trucks taking waste to the major landfills.
“We applaud the Government’s efforts to reduce electric rates and help the environment with renewable energy,” Burchetta told
As you read this, Phillip Paulwell, Jamaica’s energy minister, is likely playing Mas in Trinidad at its annual carnival. Jamaicans may be minded to say that he is playing something else.
People here are also likely to conclude that the energy minister’s sojourn to Trinidad, and whatever he may be getting up to in Port-of-Spain, San Fernando, Arima, Diego Martin, or wherever, also says something about Mr Paulwell’s sense for priorities. That is a matter on which we would like to hear the view of Prime Minister Portia Simpson Miller.
First, though, we must make clear that this newspaper does not begrudge Mr Paulwell, or anyone else, his right to annual holidays. Nor would we normally care should any Jamaican decide to jet off to Port-of-Spain to join a carnival band, swig rum and dance up a storm at the Savannah. Which, of course, is not a claim we make of Mr Paulwell, not withstanding our unease at his absence from Jamaica at this time.
Here is the context. Jamaica faces not merely a crisis, but an energy emergency. Our sense, though, is that no one in the Government, including the portfolio minister, seems to grasp either the depth or the immediacy of the problem – at least not sufficiently for it to impinge on the bacchanal.
In Trinidad and Tobago, where the music of ‘Despas’, Destra, Machel and others may be echoing in Mr Paulwell’s head, firms pay around US$0.05 per kilowatt-hour for electricity. The Trinidadians have oil and gas and enjoy government subsidies on their power bill.
In energy-deficient Jamaica, we pay upwards of US$0.41 per kilowatt-hour for electricity, which is a significant input in production and a high price which helps to make Jamaican firms uncompetitive. Indeed, over the past decade and a half, several plants that built things in Jamaica have migrated in favour of Trinidad, with which we run a trade deficit of nearly US$1 billion.
ENERGY WAFFLE
For more than a decade, Jamaican administrations have waffled and procrastinated over an energy policy to deliver cheaper electricity prices. Recently, under Mr Paulwell’s watch, there has been the final slow-motion collapse of a project that was to make liquefied natural gas (LNG) as the fuel of choice and to deliver electricity at between a 33 and 40 per cent below current prices.
Last week, for instance, the Office of Utilities Regulation (OUR) rescinded the Jamaica Public Service Company’s (JPS) position as the preferred bidder on a 360-megawatt, gas-fired power plant because the light and power company missed deadlines to demonstrate that it could meet the benchmark price. The problem is that JPS, having assumed the effort to source the fuel after the Government backed out, has been unable to find LNG cheap enough for the project to make sense at the target price.
Minister Paulwell claimed to have been blindsided by the OUR actions, suggesting that he was in favour of giving JPS additional time, without the continued financial burden of a performance bond, to rescue the deal. The upshot has been a state of confusion, in the Government and elsewhere, over energy. The situation is in need of a steady and steadying hand.
In the midst of this situation, Mr Paulwell chose carnival – the kind of stuff that would make Les Green‘s day.
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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Petrojam
Dear Editor,
While it is good that mining minister Philip Paulwell is pushing for Jamaica to start the process of developing its rare earth industry, I cannot help but wonder why is it that we seem forever stuck in this cycle of thinking inside the box.
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PAULWELL … pushing for development of rare earth industry |
Nothing is wrong with the attempt of the Government to extract rare earths from our red mud. Indeed, this effort of the government must be commended. However, if Jamaica is to truly develop, we have to start thinking outside of the box.
The primary focus of Minister Paulwell seems to be to get the project to a stage where we can export rare earths in commercial quantities. Again, nothing is wrong here. But why don’t we look at ways to develop our own industrial base with these rare earth minerals?
We are now hoping to export these minerals to Japan. What does Japan plan to do with these minerals? They plan to develop their own advanced electronic industries. Why can’t we also begin to think like this? Why must we always be willing to supply the minerals that others use to develop their own industries, while we suffer?
We did the same with bauxite, and now we are about to do the same with these rare earth minerals. When will we ever learn?
One of the reasons why there is such a global shortage of these rare earths is because China, the world’s largest exporter, is curtailing its exports. It is not just because they want to save what they have left for their own future generations
