Smell of death hits LNG idea

Gary Spaulding, Senior Gleaner Writer

There are clear indications that the long-proposed introduction of liquefied natural gas (LNG) into Jamaica's energy mix could be abandoned.

It now seems certain that with the current price of LNG, the Government will not achieve the expected 30 to 40 per cent reduction in the cost of electricity to the Jamaican consumer, and that could lead to the death of the project which was first put on the table more than 10 years ago.

Last month, the head of the LNG Steering Committee, Dr Carlton Davis, told a Gleaner Editors' Forum that the project remains up in the air.

"Circumstances will dictate where we go from here. As I said, in just a matter of days we will know what sort of game is on, if a game is on in a certain direction," Davis said.

Last week, it was time for the energy minister to confirm that the planned introduction of LNG is iffy.

"My position is that the Government must see a reduction in the region of 30 per cent on electricity or we are not going forward," Energy Minister Phillip Paulwell told The Sunday Gleaner.

"As a Government, we are determined to see the benefits redound from this project, we are still looking at a reduction of between 30 and 40 per cent on electricity costs to Jamaicans."

no large reduction

But industry insiders say with the present cost of natural gas, plus the cost to establish the infrastructure, Jamaicans would see no more than a meagre 10 per cent reduction in electricity bills with the introduction of LNG.

Last week, Paulwell admitted that after three months, a formal deal is yet to be struck with South Korean company Samsung, which was selected as the preferred bidder to develop Jamaica's LNG infrastructure.

It is understood that Samsung has written Paulwell demanding a meeting with him and all the parties involved.

That meeting is expected to take place when a team from Samsung visits the island this week.

"I am promising that the Government will be stating a definitive position later this month following the meeting with Samsung, but we are not being tardy," he said.

"I am awaiting the final report from the (LNG) steering committee, which is due this month," added Paulwell.

Stressing that Samsung was merely the preferred bidder, Paulwell declared: "I have to be careful. That is why I am proceeding with caution."

"There is no need for the impatience, as the way is being cleared for us to proceed with the negotiations ... . The process is on in earnest."

The energy minister urged Jamaicans to remember that the entire project has to be guided by a process.

"While Samsung is the preferred bidder on the (infrastructure) side, we are still looking at the big tenders on the supply side."

Speaking in Parliament, in July, Paulwell told lawmakers that the LNG Steering Committee would start negotiations with Samsung, which beat Exmar Marine of Belgium for the job to develop the storage regasification unit to be used in the LNG project.

At that time, the bidding process for the supply of the gas was well under way.

Since then, a preferred supplier has been identified but that information is yet to be made public.

The introduction of LNG forms a key element of the Government's effort to drive economic growth by slashing electricity costs, currently among the highest in the region.