360MW rankings revealed too early

The Office of Utilities Regulation (OUR) appears to have named the now-sidelined Azurest-Cambridge Power consortium as its preferred bidder for a new 360-megawatt electricity generating facility more than a week before its consultants confirmed that the consortium had proposed the best deal.

This according to documents obtained by The Gleaner.

The publicly released version of the final summary report from the Ireland-based consultants, Mott MacDonald, is dated September 26, eight days after Ansord Hewitt, the OUR's director of regulation, policy, monitoring and enforcement, told journalists in Kingston that Azurest-Cambridge was selected the top bidder.

When contacted for comment yesterday, Yvonne Nicholson, the OUR's director of consumer and public affairs, said the entity would seek to verify the accuracy of the allegation.

While the final document appears not to have affected Azurest-Cambridge's top ranking, compared to its position in a version of the final report dated 13 days earlier, this revelation is likely to deepen the controversy over the OUR's management of the bids for the energy facility, including its involvement of the Hong Kong-based Energy World International (EWI) in the exercise.

Questions are likely to include how could Hewitt, on September 18, formally declare EWI - now the preferred bidder after Azurest-Cambridge failed to meet a 15-day deadline to make a US$6.9 million security deposit - as the second-ranked bidder, eight days before Mott MacDonald's report that confirmed EWI as being rightfully in the frame.

Absence of critical info

Although on the face of it EWI had the best project, Mott MacDonald, in a September 13 version of the final report, had exempted EWI from a rank because the absence of critical technical information prevented the consultants from completing a full economic comparison of its project against that of the other bidders.

Azurest-Cambridge, in that September 13 document, was at the top of the list, but Mott MacDonald conceded that "the above ranking may change if the required information from EWI is received".

It is not clear when the consultants received the additional information, but at the September 18 press conference Hewitt declared: "If Azurest-Cambridge (the preferred bidder) fails to post this bond (one per cent of the project cost), the OUR will proceed to offer the opportunity to provide the facility to the next ranked entity (EWI)."

In the final document, the consultants concluded that despite all the bidders having failed to meet the benchmark for project financing, Azurest-Cambridge's bid, offering a gas-fired power plant, was the "best option".

According to an OUR report, the now-sidelined project was supposed to produce electricity at US13.90 cents per kilowatt hour (kWh), cheaper than EWI's US14.56 cents. With that price, EWI, based on its proposal, would generate electricity near seven cents, or approximately a fifth cheaper than what Energize Ltd - a consortium that includes the Jamaican firms Tankweld and Mussons Jamaica - say they would do for two years, burning heavy fuels until natural gas becomes available.

EWI remains controversial

At that time, Energize would reduce the price of its generating cost by US3.27 cents, or 15 per cent, by converting to gas. But even at that, Energize's electricity would be nearly US1.8 cents, or more than 12 per cent more expensive than what EWI says it can do.

Yet, EWI remains controversial. Critics say that little is known about the company, whose main operating vehicle, Energy World Corporation is listed on the stock exchange in Australia, where it runs a power plant and has small natural gas facilities.

This is compounded by the manner in which it was brought into the bidding process. It was a late entry, which those who oppose it insist compromised the Government's procurement rules - an argument with which Contractor General Dirk Harrison agreed in a recent report.

EWI was brought to the table by the energy ministry after the OUR's initial date had passed for the receipt of unsolicited bids for the energy project. Officials argued that, given Jamaica's need to lower high and commerce-crippling electricity prices, it would be foolish to ignore a potentially good proposal.