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Old Harbour power plant to

save US$74m annually on fuel

Steven Jackson

Senior Business Reporter

The plan to upgrade the Old Harbour power plant to run on liquefied natural gas will create more than 3,000 jobs and save Jamaica US$74 million ($9 billion) annually in fuel, according to projections in the latest Environmental Impact Assessment (EIA) on the project.

The report, titled The Proposed Old Harbour Plant Repowering Project, also estimates the new 190MW plant will create US$1.73 billion of value - $211 billion at current conversion rates - over its "operating life of at least 25 years".

Of that figure, the larger benefits include the plant's value at US$515 million, which includes its cost of construction at US$219 million; net savings of US$334 million for stakeholders such as Jamaica Public Service Company (JPS), workers, consumers and producers; and the employment effect, which reflects salaries and wages, at US$61 million.

The EIA was done by CL Environmental Company Limited on behalf of JPS. The power utility has said it plans to invest around US$300 million overall in developing the plant. Its construction has been contracted to Chinese firm Power China.

JPS, which has a licence from the Jamaican Government to operate the national electricity grid, plans to construct the 190MW plant adjacent to it's existing Old Harbour facility in St Catherine, which has capacity to generate 220MW of power.

The project, which aims to reduce electricity rates and to generate power with cleaner and cheaper fuel, received Government approval in February 2015 through the Electricity Sector Enterprise Team. The existing plant at Old Harbour will be dismantled when the new one is commissioned.

Workforce from local labour

The project's construction timeline stretches from the first quarter of 2016 to the first quarter of 2018. The project will create up to 3,200 indirect jobs, and some 450 direct jobs, the EIA estimates.

"Approximately 70 per cent of the workforce will be obtained from local labour. In addition, it is anticipated that approximately 1,140 and 1,520 to 1,710 indirect and induced jobs are expected to be created during the site clearance and construction phases," said the report.

The bulk of this labour would otherwise remain unemployed or underemployed in the Jamaican economy, the report asserts.

"Thus, the final net present value of the project after application of social cost-benefit analysis turns out to be US$1.73 billion, hence, the project should be undertaken as it has multiple social benefits which are reflected in the final positive net present value of the project," it stated.

The annual fuel savings of US$74.2 million represents a 38 per cent reduction in cost, but the report cautions that the estimate is based on technical assumptions.