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.
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.
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.
* 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/
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.
Head of the Electricity Sector Enterprise Team (ESET) Dr Vin Lawrence says there was a vast number of credible bids that were put forward for the supply of natural gas to the new power plant to be built by Jamaica Public Service Company (JPS).
New Fortress Energy, the same entity which won the bid to supply gas to the Bogue power plant in Montego Bay, has been selected as the entity to supply LNG to the new plant, on which construction is expected to begin by the second quarter of next year. The arrangement will see New Fortress installing the facilities to receive, store and re-gas the fuel for use at the new 190-megawatt gas-fired plant at Old Harbour.
“Six entities submitted 16 variations of proposals and we were quite delighted at this because we have gone through 15-20 years of attempting to get LNG to Jamaica without much success, and on this RFP, we have had six credible entities submitting 16 variations of supply proposals,” Lawrence said.
The ESET chair, who was addressing a Jamaica House press briefing at the Office of the Prime Minister yesterday, also announced that the JPS has selected Spanish firm Abengoa to construct the new plant.
Lawrence said the agreement is for New Fortress Energy to build a terminal and supply the JPS with 200,000 metric tonnes of LNG per annum. New Fortress Energy will build, own and operate the plant which Lawrence said must be expandable.
In Ja’s Best Interest
The company will spend more than $200 million on the terminal, which is expected to be constructed at Rocky Point, Clarendon.
“We have been trying for 20 years to bring natural gas to Jamaica, and so, we believe it is also in our interest that we have a terminal facility that can expand and grow,” he said.
The gas plant is due to be finished by the fourth quarter of 2017 and the power plant is due to be ready at the beginning of 2018.
With Jamalco indicating that it is reviewing its decision on whether it will go ahead with the building of a coal plant or switch its plans to using natural gas, Lawrence said the demand for LNG could be about 500,000 metric tonnes per year.
Schedule Not Affected
Lawrence said the bauxite-producing company is being allowed another two to three weeks to “have discussions with the possible gas supplier for a final decision to be taken”.
“This period will not affect the scheduling that we had proposed for Jamalco. If they shift to gas, we would have a two-year rather than a three-year construction period and the capital cost would be significantly less,” Lawrence added.
The new building of the JPS power plant represents part of an effort to lower electricity costs on the island. The plant will replace 292 megawatts of heavy fuel oil power plant at Old Harbour in St Catherine, and will be combined with energy from renewable sources and cogeneration facilities from Pan-Caribbean Sugar Company and bauxite companies.
The final electricity price to the grid will be less than US$0.13 cents per kWh, the ESET head said, which would mean at least a 30 per cent cut in light bills.
Lawrence said Jamaica has been looking at getting one million metric tonnes per year, and that New Fortress Energy is expected to construct a terminal that can supply the 200,000 metric tonnes that the JPS requires.
He said the demand for LNG from other sources would determine how quickly the facility is expanded.
Technical assistance was provided by the Galway Group and Hatch Mott McDonald, two reputable international firms.
Critical issues such as the security of supply, capability of delivering the project, ability to expand the terminal, ability to meet the power plant schedule, and a commitment to achieve a timely financial close were considered in selecting New Fortress Energy as the preferred bidder.
IT APPEARS that the Electricity Sector Enterprise Team (ESET) has identified a preferred bidder for the supply of gas to a 190-megawatt plant, which the Jamaica Public Service Company (JPS) is to build by the fourth quarter of 2017.
A member of the Portia Simpson Miller-chaired Cabinet said on Friday that the amendments being made to the Office of Utilities Regulations (OUR) Act was part of a move to ensure Jamaica is able to attract significant investment capital.
“Jamaica has found it difficult to attract investment in the baseload capacity over many years,” Mark Golding said in the Senate.
He noted that with Jamaica becoming the first non-North American Free Trade Agreement (NAFTA) country to benefit from the grant of a licence for the export of liquefied natural gas (LNG) from the United States, consideration is now being given to establish a gas hub in the country.
“It has given us a strategic advantage in establishing this regional hub, and we have gone through a process of seeking investor interest. We have had significant investor interest for the establishment of the gas terminal to supply gas to the new 190-megawatt plant that JPS will be building and also to possibly provide gas from that terminal to other users in the country and, indeed, in the region. I believe a preferred bidder has been identified,” Golding said.
He lamented the fact that despite many attempts to get LNG to Jamaica, the country has been unable to do so mainly because of uncertainty about regulation of the electricity sector.
Yesterday, Phillip Paulwell, the country’s energy minister, said an announcement is to be made shortly by ESET about the selection of two bidders – one to construct the new generation plant and the other to build the infrastructure and deliver LNG to the facility.
“It is fundamentally part of the diversification that is taking place. The price of electricity has gone down by 30 per cent already, but what we want to achieve is diversification, and we would never get back to the state where when the price of crude oil goes up, we are affected by severely high prices,” Paulwell said.
Meanwhile, Golding said in the Senate that the amended OUR Act will lead to improved investor interest. He argued that it would benefit Jamaica “by ensuring that our baseload capacity can be transformed and that we can get the investments needed”.
According to the Cabinet minister, investment in providing baseload energy requires significant spending, and investors are “not prepared to invest in this market where their pricing is set in a totally arbitrary manner by persons who are not accountable to anyone”.
Undermining Regulator’s Independence
Among the amendments set out in the new OUR bill, which has now been passed by both Houses of Parliament, are for the OUR to use certain factors in determining the rates to be paid to a utility company for the generation, transmission and distribution of electricity. Those factors include observing policy directions of the Cabinet and examining the licence of the utility provider, specifically as it relates to determining the appropriate rate of return for investment.
But opposition senators opposed the amendment, saying it was guaranteeing profit to investors and that it would undermine the independence of the regulator.
“The OUR will no longer be able to call itself independent,” Kamina Johnson Smith said, as she raised concerns about a possible overreach of the executive.
“We will no longer be able to truthfully state, as a fact, that we can boast of having an independent regulator,” she added.
“It is anti-transparency, anti-investor and anti-people of Jamaica,” Johnson Smith charged.
But Golding said she has misunderstood the intent of the bill and said further that getting cheaper energy for Jamaica hinges, in part, on the provisions in the bill. He argued also that Cabinet has a most important role in the process and thus it “cannot totally drop its hands in the face of a dysfunctional regulatory system that is denying the country effective” solutions to lower energy prices.
“We cannot divest, in the name of independence, to unaccountable bureaucrats, the ability to stymie investment through either their own incompetence or whatever may be the problem. We have suffered under that system,” Golding added.
The lush green Malvern hills in the distance is in stark contrast to parched lands at Red Bank, St Elizabeth. Almost everywhere, farmers are busy pouring water on their plants, which are, for the most part, fighting an uphill battle against a wicked drought that threatens to bring everyone to their knees.
At Red Bank, there is no piped water, the catchments are dry, and the sun stands overhead like a wicked overseer. But it is not all bad. One man, Denroy Evans, has, for the past year, plugged into the element and is using solar power to drive his businesses.
Evans told The Gleaner that high electricity costs had threatened the survival of his business.
“One day I went to pay my bill and the lady looked at me and said, ‘Mr Evans, wait, a weh yu a burn up deh suh?'” Evans recalled.
He had gone to a bill payment agency in Junction, five miles from Red Bank, to pay a Jamaica Public Service (JPS) bill of $100,000.
“That is when I started to think. I said to myself, ‘If I could save that $100,000 per month, it would be $1.2 millon per year. So why not muscle up and put in the system and save it?'” Evan said.
Invested $4 Million
That was just over two years ago. Since then, he has invested roughly $4 million in a solar lighting system, and hardly has to deal with the JPS.
“With the high cost of energy, you have to find alternative sources. With the introduction of the solar system, we are now paying, depending on the time of the year, $6,000 to $12,000 per month. We have saved 85 to 90 per cent by installing solar, [the cost of] which will be recovered in about three to four years,” Evans told The Gleaner.
The system, which has been mounted on the top of a building that serves as home for a farm store, a supermarket and a variety store, consists of 63 solar panels, 56 batteries, a 6,000 watt inverter, and three controllers for the charging system. It runs some 10 refrigerators, lights, computers, cameras and fans.
“On the average, I pull down about 80-kilowatt (kw) hours per day and use about 75kw hours daily. We get good weather. We don’t get any rain and the sun is always out,” Evans quipped.
He said that the use of renewable energy is definitely the way to go, but cautions that anybody who wishes to invest should first of all educate himself/herself about the system.
“I have seen many people install it and they don’t even go into the battery room to check anything. What results is that the battery runs out of water … you need to be integrally involved in your solar system,” said Evans, who is a trained farmer and one-time teacher.
Light and power company JPS said that it is in favour of Jamaicans maximising the potential of solar and other renewable power. The company said, however, that the regulatory authorities must pay attention to the fact that the cost of operating the national grid is not dependent on the number of users.
“If you come on for one hour, I have to do the same exact generation that I have to do if you are on for one day,” Kelly Tomblin, JPS president and CEO told The Gleaner.
“If you have solar and you come on my system for 10 minutes, I have to build the same amount of infrastructure. If you are going to go solar, go completely solar, or if you are coming on my system, price it so that it reflects the fact that I have to build an exact same power plant and exact same infrastructure,” Tomblin added.