Energised - 360MW third-ranked bidder questions OUR's due diligence, claims it has cash ready for bond

Published: Monday | October 7, 2013 Comments 0
Bicknell
Bicknell

Livern Barrett and Anastasia Cunningham, Gleaner Writers

The Jamaican consortium still clinging to hopes that it will get the nod to build the island's much needed 360-megawatt power plant has blasted local regulators, charging that they have been "less than vigorous" in the due diligence required for a project of this size.

The sharp criticism from Energise Jamaica Limited (the third-ranked bidder) comes days before Stewart Elliot, the executive chairman of Energy World International (EWI) - the company that is now the preferred bidder for the project - is scheduled to arrive in the island to sign off on the project.

Citing one example, Energise Jamaica made reference to the assertion by EWI, in its bid, that it was prepared to start operations using liquefied natural gas (LNG) from its own gas fields in Indonesia at an offer price of US$0.14.56 per kilowatt hour.

"We challenge the OUR [Office of Utilities Regulation] to disclose whether any bidder submitted valid and legally binding supply contracts for LNG," the consortium said in a statement yesterday.

Further, the company challenged the OUR to tell the country the price at which EWI would sell energy to the national grid if the new 360-megawatt plant is to operate on non-LNG fuel.

"This is, potentially, an extremely dangerous and costly shortcoming," Energise Jamaica warned.

Quoted source

The consortium, which was seeking to clarify aspects of its bid for the project, said it quoted a price of approximately US$0.16.7 per kilowatt hour using LNG and approximately US$0.19.9 per kilowatt hour using heavy fuel oil (HFO). The company said in both cases it provided the OUR with a source of supply.

However, an OUR release said Energise quoted US$0.18.27 to provide natural gas and US$0.21.54 for HFO.

Energise principals, led by businessman Christopher Bicknell, noted: "Our HFO price uses one per cent sulphur fuel, a more expensive form of HFO. We have been reliably informed by multilateral debt financiers, during our extensive due diligence, that they are unlikely to support cheaper, less clean and more polluting form of HFO for a plant the size of a 360MW."

The statement continued: "It is possible that ... the authorities are unaware of this reality."

The company said it proposed a limited period of no less than 24 months to run the plant on HFO before switching to LNG.

Touting its own bid, Energise Jamaica said it would have no difficulty coming up with the one per cent bid bond to secure the contract. The company said it already has US$100 million of committed equity capital earmarked for the project.

"We believe no other bidder has anything remotely close to this amount of capital that can be dedicated to this project," the statement said.

"That requires no further due diligence," the company boasted, noting that it has a commitment from US Fortune 500 company, Seaboard Corporation.

On Friday, following the failure of the highest ranked preferred bidder, Azurest Cambridge Power, to meet the deadline to pay the one per cent security bond to secure the contract, the OUR named EWI as the next preferred bidder. The OUR refused to grant Azurest Cambridge the 15-working-day extension it requested.

EWI now has 15 days to pay a security bond, which would take them to October 19.

Money secure

Elliot told The Sunday Gleaner in an article published yesterday, that the process was already in place to secure the US$7.4 million bond to meet the deadline.

If EWI is unsuccessful, the contract would then be offered to Energise Jamaica.

Despite being sidelined, the principals of Azurest Cambridge said they would not be knocked out of the game and have vowed to continue their efforts to secure the investment capital needed to build the 360-megawatt power plant.

OUR's ranking of the bidders in the project to provide baseload capacity to the national grid had Azurest Cambridge in first place, followed by EWI, then Energise Jamaica Ltd, then Optimal Energy.

The 360-megawatt plant, which is expected to supply half of Jamaica's energy needs to the national grid, is desperately needed to slash Jamaica's high energy bill.

 

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