Spanish firm TSK to construct Old Harbour LNG power plant
South Jamaica Power Company (SJPC), a subsidiary of the Jamaica Public Service Company (JPS), on Wednesday signed an engineering procurement and construction (EPC) contract with Spanish firm TSK Group to undertake the turnkey construction of the 190 megawatt combined cycle plant at Old Harbour Bay, St Catherine.
Construction of the US$300-million project is expected to start by March 1, according to project director of SJPC, David Cook, who said the signing was the culmination of negotiations the companies have had for the past several months.
Signing of the contract means that TSK is assured of building the plant and replaces two other foreign-based companies, which were considered to undertake the long-awaited project, which is meant to make power more affordable for households, local firms, as well as reduce the country's imports of oil and use of fuel.
In December 2015, the JPS said it had entered into a memorandum of understanding with a China-based energy company to build the power station.
The Chinese company, which was not named at the time but was subsequently identified as Power China, was expected to replace the Spanish firm Abengoa, which filed for protection from creditors a few days after it was named as the preferred bidder for construction of the power plant.
SJPC is now finalising the loan documentation to access funding from a syndicate of local banks and financial institutions led by National Commercial Bank, Cook said.
Following that, the next stage is to issue the contractor with the notice to proceed, Cook told the Financial Gleaner at a reception at the Spanish embassy in St Andrew on Wednesday evening, following the signing of the contract earlier that day.
"My role is to ensure that the project is completed within budget and on time, coordinating with the EPC contractor (and) with the fuel supplier because very important to this project is the supply of LNG to Jamaica in order to improve the fuel efficiency," he said.
Commissioning of the plant, originally set for July 2018, is now set for 27 months after the issue of the notice to proceed, which would put it about mid-2019 as the completion date.
"But we will see (liquefied natural) gas and commissioning starting towards the end of 2018 because gas arrives 22 months after NTP (notice to proceed) and the commissioning process, and starting to turn the engines and putting power to the grid will start a lot earlier, but the final handover is 27 months after NTP, which is early 2019," he said.
TSK managing director, Joaquin Garcia said the project is the first of an expected long-term relationship with Jamaica. "We are ready to engage in projects in other sectors such as mining, oil and gas" and other energy facilities in the island, he added.
General manager of SJPC, Dan Theoc, who is also chief financial officer of JPS, said the power plant will be more fuel efficient and will reduce Jamaica's imports of oil and use of fuel. Once operational, "we estimate that will be about US$200 million in savings per annum," he said.
SJPC, the vehicle created by JPS and its majority owners, Marubeni and Korea East West Power, will execute the project.
SJPC and JPS have signed a 20-year power purchase agreement under which the subsidiary will sell the power generated by the plant to the island's sole distributor of electricity.
TSK is a family run industrial group specialist on renewable projects as EPC contractor, with more than 35 years of experience carrying out projects in four continents.
According to information on its website, TSK has positioned itself as one of the major EPC contractors in the energy sector, both conventional and renewable, and has acquired extensive experience in engineering, construction, assembly and start-up of power stations using open cycle, combined cycle and cogeneration technologies, wind farms, as well as thermosolar, photovoltaic, hydraulic and biomass plants.