The Government’s proposed 360 megawatt power plant was again thrust into the public spotlight with a call by the Energy Monitoring Committee (EMC) yesterday for more due diligence on the project.
According to the EMC, a number of “important items” need to be thoroughly checked before the Office of Utilities Regulation (OUR) can make a positive recommendation to the Government for a licence to be granted to Energy World International (EWI), the preferred bidder on the project.
The EMC said that what was needed was:
* A thorough absorption of any substantive information in the due diligence report followed by a forum to solicit the preferred bidder’s responses to these potential issues;
* Gaining a better understanding of the progress of current projects being pursued by EWI-related entities to ensure there are no adverse ramifications for Jamaica’s bid; and
* Focusing on the financial capability of the preferred bidder, including evidence of commitment with the usual qualifiers from its bankers/equity sources, as would be expected in a project that is greater than US$700 million in size.
The EMC made the call after noting that since its last meeting with the OUR on the issue, a Power Purchasing Agreement (PPA) was ratified and a due diligence report was submitted by the Revenue Protection Division of the Ministry of Finance & Planning to the OUR.
But the EMC said it had not yet received specific information on the PPA, as it is awaiting consent from the counterparties to that agreement. However, it expects to have a summary of the key terms by early this week.
“This information will allow us to monitor commitments made by the preferred bidder on an ongoing basis with respect to their role as the power provider in the PPA,” the committee said.
“As it relates to the due diligence report, while we understand the confidentiality of such a document, given that reports of this nature typically cite sources who give testimony and thereby need to be protected, we have requested, through the OUR, that this report be released in an abridged version to the EMC and other important stakeholders,” the committee added, noting that the next step in the bid process is the granting of a licence to the preferred bidder.
The 360 megawatt project aims to slash, by one-third, Jamaica’s energy costs which, at US40 cents a kilowatt-hour, has been identified as a significant contributor to the country’s inability to increase production and attract more investments.
But the project has been mired in controversy after the OUR, in October 2013, cancelled the preferred bidder status it had granted to United States-based consortium Azurest-Cambridge because the firm failed to meet its deadline to produce a bid security of one per cent of its proposed US$690-million investment.
The OUR then promoted Hong Kong-based firm EWI to the position, further fuelling controversy over EWI’s entry to the process more than a month after the bids had closed.
With controversy continuing to dog the project, the Government, last December, partnered with private sector lobby groups to form the EMC in an effort to ensure that the bid process was followed in the manner prescribed by the OUR.
The EMC is also mandated to ensure that at the culmination of the process, the price of electricity provided by the licensee to Jamaica Public Service Company does not exceed US$0.1288 per kWh.
The EMC is co-chaired by Carlton Davis and Peter Melhado and comprises Fitzroy Vidal and Michelle Forbes from the Ministry of Science, Technology, Energy and Mining; William Saunders, energy consultant to the Government; Simon Roberts of the Jamaica Manufacturers’ Association; Noel daCosta from the Jamaica Chamber of Commerce; Jeanette Calder representing the Jamaica Civil Society Coalition; and Lloyd Goodleigh of the Jamaica Confederation of Trade Unions.
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Energy committee urges more due diligence in 360MW project
