Wed | Dec 13, 2017

Long Pond co-generation plant in jeopardy - CEO

Published:Thursday | August 31, 2017 | 12:00 AMMark Titus
Andrew Hussey
Karl Samuda
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WESTERN BUREAU:

Chief executive officer of Everglades Farm Limited says that the long wait for a request for proposal (RFP) to obtain a licence is threatening the US$38 million co-generation facility planned for Long Pond in Trelawny as their partner, Arrakis Development, has begun to lose interest.

"We have an investor, so raising the funds is not an issue, and we have a business plan that is credible. Everybody likes it, but the challenge is timing," Andrew Hussey told The Gleaner yesterday.

 

NO RFP THIS YEAR

 

"The Government's position is that we must wait on the next RFP, which has a number of steps to go through, and while we had expected one for this year, it now appears that there will not be an RFP until next year. We are very much frustrated, just like Monymusk."

He added, "Arrakis has been at the table with us for almost two years, but they are now losing interest fast."

Earlier this year, Everglades Farms announced that it had secured a deal with Arrakis Development, an independent power-production company based in the United States, to inject some US$38 million, or J$4.9 billion, to transform the Long Pond Sugar Factory into a co-generation facility and even projected Government's approval by the third quarter of 2017.

Such an approval will pave the way for the partnership to negotiate a power-purchase agreement with the Jamaica Public Service Company to sell the electricity produced by the new facility.

According to Hussey, the co-generation facility is hinged on securing the power-purchase agreement with the JPS. The transformation of the factory would begin approximately 18 months after that has been secured.

... Project has Samuda's blessing

In a recent interview with The Gleaner, industry, commerce, agriculture and fisheries minister Karl Samuda gave his blessing for the multimillion-dollar co-generation facility to be built at Long Pond in Trelawny by Everglades Farm Limited. He noted, however, that they needed to secure a power-purchase agreement.

"Everglades have a very exciting programme that includes the growth of cane for energy," Samuda said. "They have secured funding, but in order to move that forward, they will have to have a power-purchase agreement, and it has to be on a competitive basis."

Everglades' chief executive officer, Andrew Hussey, is urging the Government to grant his long-awaited request for proposal in order for him to obtain the licence needed to get the project under way. The hold-up is jeopardising a partnership with United States-based company Arrakis Development.

"We would hope that the Government of Jamaica, through a Cabinet submission, would see this as an unusual situation, as a crisis in the parish of Trelawny," said Hussey. "Allow the licence for X megawatt and allow Arrakis/Everglades to negotiate the power-purchase agreement with JPS (Jamaica Public Service Company)."

Hussey added that Section Nine, subsection (c) of the 2015 Electricity Act states that where the Cabinet has determined that any of the following circumstances exists, namely,

(i) an emergency situation exists such as to make a competitive bidding process impractical; ( ii) the grant of the licence is necessary in order to accommodate an offer from a foreign government to the Jamaican Government that will benefit the electricity sector; (iii) due to exceptional circumstances or the prevailing economic and financial conditions in Jamaica, the minister can so grant a licence.

"We are not asking the minister to bend any rules. It's in the legal framework for the minister to do exactly what we are asking him to do," Hussey said.