With rumblings continuing about the provision of 360 megawatts of power to the national grid, the Office of Utilities Regulation (OUR) last Friday sought to clear the air with a release on its actions so far and its next moves. Here is an edited version of that release.
Why not the preferred bidder?
Azurest-Cambridge Joint Venture Association with Waller Marine Inc (Azurest-Cambridge) failed to make the required posting of a security bid bond, the final date for which was October 3, 2013.
The bid bond represented one per cent of the total investment cost of the proposed project. The consortium had been given 15 days to furnish the OUR with the bond, after it was named highest-ranked bidder in the bid evaluation exercise.
In a letter to the OUR (dated Thursday, October 3), Azurest-Cambridge requested an additional 15 working days to post the bid security.
However, in keeping with the requirements of the OUR's Instructions for Final Proposals, the request was denied.
Savings for Jamaica
Notably, the OUR's calculations show that every US$0.01 reduction in the price of electricity translates to just under J$3 billion in savings annually to consumers at the current exchange rate.
Why defy the Office of the Contractor General?
The contractor general has not answered the OUR's position that he applied the wrong procurement procedure, which is the fundamental issue and the basis on which he arrived at all his conclusions.
The OUR maintains that no authority that properly considers the facts and applies the relevant provisions of law and policy would have arrived at the contractor general's conclusions.
Therefore, the OUR maintains that EWI's inclusion in the list of selected entities invited to submit bids on August 8, 2013 was lawful and in accordance with Condition 18 of the Amended and Restated All Island Electric Licence 2011 and the Government's procurement guidelines and was based on the adoption of a process that afforded all the entities to compete fairly, on the same basis and subject to the same rules.
In the pursuit of the national imperative to reduce the real cost of electricity to Jamaican consumers while meeting the need to secure capacity in the shortest possible time, the OUR has, at every relevant point in the procurement process, been diligent in ensuring that the process is conducted fairly and equitably.
The OUR has been and will continue to be committed to the rule of law, and the transparency and integrity of the procurement process while it strives to achieve the required generation capacity at affordable prices for all Jamaicans.
OUR moves to next-ranked bidder
The OUR will proceed to offer the opportunity to provide baseload-generating capacity to the national grid to the second-highest-ranked bidder as ranked by international consultant, Mott MacDonald.
The OUR will now inform the next-ranked entity, Energy World International/Pacific LNG (EWI), that it has 15 days as of October 4, 2013, to provide its bid bond.
As with Azurest-Cambridge, conclusion of a formal arrangement with EWI is conditional on the completion of aspects of due diligence on the company and its principals by the Financial Investigation Division, which had been requested to carry out this exercise for all bidders.
The basis for the decision
To better inform public discussion and to further clarify the reason for its decision, the OUR considers it important to furnish the following information with respect to its computation of the comparative rates that were offered by the selected entities.
The economic rankings were done in a standardised manner based on the impact of the proposed tariff schedule of each bidder on the system over the expected 20-year contract period.
Rank BidderBid Price Fuel Type
1 Azurest /Cambridge13.90Natural gas
2 EWI14.56Natural gas
3 Azurest /Cambridge 16.35 HFO
4 Energise Jamaica 18.27 Natural gas
5 Optimal 18.30 Natural gas
6 Energise Jamaica21.54 HFO
On September 18, 2013, the OUR and its international consultants, Mott MacDonald ranked the bidders in the project for the procurement of baseload capacity to the national grid as follows:
Highest-ranked bidder: Azurest-Cambridge Joint Venture Association with Waller Marine Inc
Second-highest-ranked bidder: Energy World International Ltd
Third-highest-ranked bidder: Energise Jamaica Ltd (incorporating Amourview Holdings Limited, Tank-Weld Limited and Seaboard Jamaica Corporation)
Fourth-highest-ranked bidder: Optimal Energy