JPS: LNG power plant to cut US$300m from oil bill
Correction & Clarification
A photo of Pedro Cisneros was incorrectly identified as Dan Theoc, Chief financial officer of Jamaica Public Service Company Limited.
We regret the error.
Jamaica can slash oil imports by US$300 million annually or roughly 10 per cent based on the implementation of Jamaica Public Service Company's (JPS) planned 360-megawatt power project, says the utility's chief financial officer Dan Theoc.
It would result in slashing customer light bills between 32 per cent and 40 per cent said the executive at AmCham Jamaica's private-sector energy forum held Thursday in New Kingston.
The plant, slated for completion in 2015 and powered by liquefied natural gas (LNG), would reduce Jamaica's reliance on costly oil imports, which topped US$1.48 billion between January to July 2011, or 61 per cent higher than year earlier levels, based on Bank of Jamaica data.
Oil has been hovering at around US$100 per barrel, which could equate to an annualised oil bill of more than US$3 billion for 2011.
"Our outlook for the next five years involves fuel diversification. The 360-megawatt natural gas-fired power plant will allow us to replace aged power plants, and that will allow us to be at least 40 to 50 per cent more efficient in our use of fuel; and I believe that will allow the country to save at least US$300 million per annum in fuel," Theoc said.
The utility executive expects the price of electricity over the period to fall from 36 US cents to 22 US cents, or roughly a 40 reduction in energy costs in "as little as 27 months" based on the slated completion date of the mega power plant.
Cheaper fuel source
LNG and coal offer a cheaper fuel source for integration into new power plants but these options have remained mostly stalled since the 1990s, in part due to political indecision. Theoc reasoned that this procrastination has resulted in substantial costs for the country.
"If five years ago we flipped the coin and said heads - coal, or tails - LNG, then today the cost of energy would have been 40-50 per cent cheaper. This debate has got to stop. Quite frankly, there is space for both coal and natural gas," he said to applause.
Phillip Paulwell, the minister of energy, mining and ICT, last month said the new Simpson Miller administration was open to Jamaica's power plants burning coal and petcoke - cheap fuels that often find themselves in the cross hairs of environmentalists because of their high carbon emissions.
Paulwell claimed their introduction could slash energy prices by half in three years.
The energy minister expects the price of electricity over the period to fall further than JPS predicts, to about 55-62 per cent or around 15 US cents per kilowatt hour.
Last year, JPS announced that construction of the 360MW LNG-fired plant would cost J$52 billion (US$602 million).
The plant would operate on diesel as backup fuel.