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Bauxite energy project delays won’t derail three-year electricity programme - Lawrence

Published:Friday | June 26, 2015 | 12:01 AM
JIS Photo Chairman of the Electricity Sector Enterprise Team (ESET), Dr Vincent Lawrence (left), speaks at a press briefing at the Office of the Prime Minister on Tuesday, June 23, 2015. He is joined by ESET members Christohpher Zacca (centre) and Professor Alvin Wint.

proceeded to have negotiations with JPSCo for a power purchase agreement," he said.

But at the end of May 2015, "Rusal told ESET that they were having difficulty settling partnership discussions with American Ethane".

That feedback came after ESET requested information from Rusal relating to the partnership arrangements, shipping, receiving, methods of transporting ethane and the arrangements for construction.

They advised that they were not yet able "to settle with American Ethane as developer and as gas supplier" and needed more time to either complete the discussions or consider other proposals for Alpart.

capacity unknown

Here again, the power plant's capacity is unknown.

"Rusal will inform us once they have settled their energy plan which, they have informed, is being revised," Lawrence told the Financial Gleaner.

Notwithstanding the bauxite delays, the ESET chairman's message was firm that the 2018 deadline to cut electricity prices was intact.

"We have a time table and schedule ... to bring the price of electricity down for the consumer. We have a mandate from the Government. We therefore, as a consequence, told Rusal that since they have not concluded definite contractual arrangements, we are going to defer their arrangements pending any further developments," he said.

"This does not affect our schedule," he reaffirmed.

Otherwise, another of the energy project proposals assessed by ESET has shown movement. A deal is being negotiated between General Electric and JPS to retrofit the 115 MW diesel-fired Bogue power plant in Montego Bay to operate on LNG - the transaction is expected to be finalised in July - and JPS has also hired Fortress Energy to develop the regasification facility at Bogue and supply the plant with natural gas.

Lawrence said that with the conversion of Bogue now set to be completed in the first quarter of 2016, it's expected that the plant would dispatch power supplies more frequently - from the current 30 per cent dispatch rate to 90 per cent when cheaper fuel is in play.

He said Bogue is operational only 30 per cent of the time because of how expensive it is to generate electricity from diesel oil.

JPS clarified on Wednesday that the value of the contract with General Electric was still being negotiated, countering a previous report that the deal was valued at US$15 million. That figure is the amount approved by the Office of Utilities Regulation for JPS to collect from its customers to help finance Bogue's conversion.

The value of the Fortress agreement was not disclosed.

Lawrence said that efficiencies and higher generation gained at Bogue will compensate for any delay in the energy overhaul in the bauxite sector.

"When we convert, because of the lower cost, we expected Bogue to be dispatched 90 per cent of the time. When we tie the whole grid together ... it is not a threat," he said, referring to the Rusal fallout.

Jamaica's energy reform programme had gained momentum during a spike in oil prices that were performing above US$100 per barrel up to mid-2014. Prices began to nosedive shortly after to a low of US$40 per barrel earlier this year. They are currently back to US$60.

Lawrence speculated that the fall in the price of oil might be influencing Rusal's outlook.

"Rusal is still proceeding, but their main thing is to reassess the fuel mix. We suspect, with the current oil market, many industries are assessing what is their proposed fuel mix," he said.