JEP predicts big savings for electricity consumers after debt refinancing
Independent power provider Jamaica Energy Partners, JEP, has refinanced $17 billion in debt, which gives it space to begin the internal planning for a new natural gas plant. The timeline for the plant would depend on the Government utility regulator's call for proposals for additional energy capacity to the national grid.
"We are putting together all things in place, so we can capitalise on the opportunity whenever the Government calls," said JEP CEO Wayne McKenzie on Tuesday.
JEP sells power to the Jamaica Public Service Company, the monopoly distributor of electricity and operator of the national grid. McKenzie said the refinancing of the company's debt would save energy consumers around US$500,000 annually. He indicated that such costs are passed on to consumers rather than seen as savings to JEP based on the way contracts are arranged.
Sagicor Bank Jamaica Limited served as lead arranger for $11.6 billion of the $17 billion in syndicated loans, while Sagicor Investment Jamaica Limited acted as lead arranger for $5.4 billion in bonds. The refinancing exercise was completed in less than a month.
The process resulted in a stronger partnership between JEP and the Sagicor group and influenced participation from several local commercial banks, pension funds, financial institutions, high net-worth individuals and other banks within in the region, said JEP in a release.
"I feel proud to know that this company managed and operated by locals is now being financed by Jamaican banks. I feel particularly proud that the process to transact business in Jamaica has improved tremendously," McKenzie said. The energy company is owned by Americans but managed by Jamaicans.
"But more important, the work implemented by the team in structuring this transaction, the efforts by our banking partners, Sagicor, and its syndicated partners, has resulted in providing financing solution cheaper than any negotiated in the energy sector. Pursuant to the credit agreement, with lower interest rates and a tenor as long as multilaterals, Jamaicans can look forward to lower energy costs from Jamaica Energy Partners," he added.
JEP commenced operations in September 1995. It currently owns and operates two power barges, Doctor Bird I and Doctor Bird II, with outputs a combined 124 MW of power. It's affiliate company, West Kingston Power Partners, is a land-based, 65.5 MW plant. Both companies are owned by InterEnergy Holdings Group of New York.
JEP's output covers almost 20 per cent of Jamaica's electricity needs.