Preferred bidders identified for 190-megawatt power plant
IT APPEARS that the Electricity Sector Enterprise Team (ESET) has identified a preferred bidder for the supply of gas to a 190-megawatt plant, which the Jamaica Public Service Company (JPS) is to build by the fourth quarter of 2017.
A member of the Portia Simpson Miller-chaired Cabinet said on Friday that the amendments being made to the Office of Utilities Regulations (OUR) Act was part of a move to ensure Jamaica is able to attract significant investment capital.
"Jamaica has found it difficult to attract investment in the baseload capacity over many years," Mark Golding said in the Senate.
He noted that with Jamaica becoming the first non-North American Free Trade Agreement (NAFTA) country to benefit from the grant of a licence for the export of liquefied natural gas (LNG) from the United States, consideration is now being given to establish a gas hub in the country.
"It has given us a strategic advantage in establishing this regional hub, and we have gone through a process of seeking investor interest. We have had significant investor interest for the establishment of the gas terminal to supply gas to the new 190-megawatt plant that JPS will be building and also to possibly provide gas from that terminal to other users in the country and, indeed, in the region. I believe a preferred bidder has been identified," Golding said.
He lamented the fact that despite many attempts to get LNG to Jamaica, the country has been unable to do so mainly because of uncertainty about regulation of the electricity sector.
Yesterday, Phillip Paulwell, the country's energy minister, said an announcement is to be made shortly by ESET about the selection of two bidders - one to construct the new generation plant and the other to build the infrastructure and deliver LNG to the facility.
"It is fundamentally part of the diversification that is taking place. The price of electricity has gone down by 30 per cent already, but what we want to achieve is diversification, and we would never get back to the state where when the price of crude oil goes up, we are affected by severely high prices," Paulwell said.
Meanwhile, Golding said in the Senate that the amended OUR Act will lead to improved investor interest. He argued that it would benefit Jamaica "by ensuring that our baseload capacity can be transformed and that we can get the investments needed".
According to the Cabinet minister, investment in providing baseload energy requires significant spending, and investors are "not prepared to invest in this market where their pricing is set in a totally arbitrary manner by persons who are not accountable to anyone".
undermining regulator's independence
Among the amendments set out in the new OUR bill, which has now been passed by both Houses of Parliament, are for the OUR to use certain factors in determining the rates to be paid to a utility company for the generation, transmission and distribution of electricity. Those factors include observing policy directions of the Cabinet and examining the licence of the utility provider, specifically as it relates to determining the appropriate rate of return for investment.
But opposition senators opposed the amendment, saying it was guaranteeing profit to investors and that it would undermine the independence of the regulator.
"The OUR will no longer be able to call itself independent," Kamina Johnson Smith said, as she raised concerns about a possible overreach of the executive.
"We will no longer be able to truthfully state, as a fact, that we can boast of having an independent regulator," she added.
"It is anti-transparency, anti-investor and anti-people of Jamaica," Johnson Smith charged.
But Golding said she has misunderstood the intent of the bill and said further that getting cheaper energy for Jamaica hinges, in part, on the provisions in the bill. He argued also that Cabinet has a most important role in the process and thus it "cannot totally drop its hands in the face of a dysfunctional regulatory system that is denying the country effective" solutions to lower energy prices.
"We cannot divest, in the name of independence, to unaccountable bureaucrats, the ability to stymie investment through either their own incompetence or whatever may be the problem. We have suffered under that system," Golding added.