Clash over JPS - Paulwell said to be at odds with Mian over status of 360-megawatt project

Published: Wednesday | February 6, 2013 Comments 0
Phillip Paulwell
Phillip Paulwell

Arthur Hall, Senior News Editor

Reports have surfaced that a clash of wills between outgoing Director General of the Office of Utilities Regulation (OUR), Ahmad Zia Mian, and Energy Minister Phillip Paulwell has played a huge role in the confusion which has surrounded the Jamaica Public Service Company's (JPS) proposed 360-megawatt (MW) project.

High-level sources in the energy sector have claimed that Mian, who leaves office on Friday, has rebuffed efforts by Paulwell to give the JPS another extension to finalise plans to carry out the multibillion-dollar project.

Paulwell yesterday responded to a Gleaner article published yesterday which quoted Mian as saying the JPS project was dead.

In his mid-morning release, Paulwell claimed, "The Government had not yet received a final position from the OUR in relation to this matter".

"I am aware that the JPS has made a revised submission on the 360MW bid, and we have been in discussions with the OUR but, to date, we have received nothing formal to take to Cabinet," added Paulwell in a seemingly backhanded confirmation that the ministry had sought more time for the power company.

Rfp at an end

But by late afternoon the OUR issued its release stating that the JPS and its stakeholders had been informed since last Friday that the request for proposal (RFP) process with JPS in relation to the 360 MW project was at an end.

"The advisory came after JPS and the project company, South Jamaica Power Company Limited (SJPC), missed another deadline which was granted to facilitate the provision of project agreements, identify the supplier of liquefied natural gas (LNG) for the project and provide a renewed bid security," stated the OUR.

In a release yesterday, JPS President and CEO Kelly Tomblin said the OUR's decision to end the RFP process was disappointing "as the new power plant would have contributed to a significant reduction in electricity rates".

Said Tomblin: "The termination of the process means that our customers will have to wait longer to see a real reduction in electricity charges."

The regulator said it had already allowed the extensions to facilitate the negotiations of the project agreements between JPS and SJPC, and a fuel supply agreement between JPS and suppliers of natural gas.

"This was the third extension granted by the OUR to JPS and SJPC. They were given until January 30 to complete the outstanding matters relating to the bid," said the regulator.

"The OUR's decision comes bearing in mind its mandate and its overarching duty to the public and the national interest," added the regulator, also in a thinly disguised response to Paulwell.

In late 2011, JPS was awarded the right to construct a 360MW combined cycle plant after it was the only bidder to supply new generating capacity to the national grid on a build, own and operate basis. The award was assigned to SJPC whose shareholding consisted of JPS, and JPS's major shareholders.

Scheduled completion

The plant was originally scheduled for completion by mid-2014 and was part of the project to supply up to 480MW of new generating capacity for the country in various tranches.

This new capacity was intended for the displacement of approximately 292 MW of aged plants with the remainder to provide for demand growth.

Yesterday, in a move seeming to support his stance for the extension to the JPS, Paulwell used his media release to note that the OUR has presented him with an analysis of the country's electricity demand and supply.

Paulwell noted that the OUR concluded, among other things, that there was no need for the procurement of new capacity on an emergency basis, and that such a procurement at this time would be "at best sub-optimal".

"In that report, the OUR confirmed that Jamaica is not in danger of experiencing blackouts between now and 2017," said Paulwell.

He said the OUR's ruling would be discussed and a position taken at the monthly meeting of the Jamaica Energy Council on Friday before the matter is referred to the Cabinet.

However, any change to the OUR's position could see the regulator and the ministry facing off in court over the legality of any course accepted that is not in keeping with yesterday's announcement from the OUR.

arthur.hall@gleanerjm.com

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