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Conduit looking for opportunity in Jamaican LNG - Commissions convertible 66-megawatt plant

Published:Wednesday | November 14, 2012 | 12:00 AM
Chairman of Conduit Capital Partners, J. Scott Swensen, speaks at the commissioning of the West Kingston Power Partners, at the plant complex at Industrial Terrace in Kingston on Thursday, November 8, 2012. - Winston Sill/Freelance Photographer

Conduit Capital, an investment fund that owns energy assets in Jamaica, wants to invest domestically in liquefied natural gas (LNG).

J. Scott Swensen, chairman of Conduit Capital Partners Limited, also said his company is raising another round of capital for projects in the Caribbean and Latin America.

"We are raising Fund 4 and we hope it will be US$800 million, and we are very interested in LNG. We are looking forward to investing in the energy sector here," Swensen said last week.

He was in Jamaica for the commissioning of West Kingston Power Partners (WKPP), a new 66 megawatt plant at Marcus Garvey Drive in Kingston developed by Conduit.

WKPP is sister company to Jamaica Energy Partners (JEP), which commenced operations in Jamaica in 1995 and is currently the largest independent power provider in Jamaica with output of 124 megawatts. The power supplies of JEP and WKPP are contracted to the Jamaica Public Service (JPS).

In September, the Government rid itself of the financial burden of implementing the long-discussed LNG project, having found it too onerous to develop the infrastructure and source the gas at a price that would result in significantly lower energy prices.

The decision was made to hand over the project to the JPS.

Swensen said that Jamaica's political stability balances its poor credit rating, making it comparable to flourishing Latin American giants, including Brazil and Mexico.

"Jamaica, unfortunately, does not have one of those top credit ratings. But what it does have is a stable political environment," said the investor.

"We do not care whether the government is liberal or conservative, just that when rules are made it sticks to it. Because of that, we have invested US$130 million in Jamaica (JEP and WKPP) and that is as high as our investments in Mexico."

WKPP was conceptualised and developed and is now operated totally by a Jamaican team led by Wayne McKenzie as WKPP CEO, according to the press briefings on the project.

Financing for the US$99m WKPP plant included US$22 million from the International Finance Corporation, and US$77 million sourced from a syndicate of six institutions, including locally based Citibank and Scotiabank.

The WKPP plant runs on fuel oil, with the capacity to convert to cheaper LNG, said JPS chairman Hisatshugu Hirai, who also urged Jamaican leaders to cease procrastination on the implementation of LNG plans.

best opportunity

"After the Tsunami in 2011, Japan decided to add more LNG and renewables and not the cheaper nuclear energy. It may not have been the best but we moved forward. The point is that we can't wait but have to act," Hirai said at the WKPP commissioning ceremony. "Jamaica is at a crossroads. Landing gas may not be easy but now is the best opportunity; otherwise another choice may take 10 more years. We must move quickly but patiently," he said.

He also reasoned that the WKPP plant further demonstrated the liberalisation of power generation.

"We welcome independent power providers like WKPP, as IPPs provide about 30 per cent of power to the grid, which demonstrates that the market is open to competition."

Meantime, Minister of Environment Robert Pickersgill, who represented the prime minister at the ceremony, argued that household conservation could save Jamaica US$40 million annually.

"The only energy that Jamaica produces is conservation," he said. "There is much we can do to reduce demand."

Pickersgill explained that reducing the average monthly household light bill from 170 kilowatt hours to 150 would result in savings to 480,000 legitimate households.

"Households pay US$0.35 per kilowatt hour and this (conservation) would result in savings of US$40 million per year," he said, adding that the figure would become supremely larger once extrapolated to heavy users of electricity, including factories and the alumina sector.