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Korean firm buys 40% of JPS

Published:Friday | April 8, 2011 | 12:00 AM
In this file photo workmen from Jamaica Public Service are seen performing maintenance work on a utility pole along Retirement Road in Kingston
James Robertson ... witnessed the signing of the sales agreement between Marubeni and Korea East West Power Company. - File photos
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Marubeni Corporation has sold a 40 per cent stake in Jamaica Public Service Company (JPS) to a South Korean energy outfit, giving up half of its holdings in the local utility in a deal that, on the face of it, mimics the transaction with former partner TAQA.

The terms of the transaction with Korea East West Power Company Limited (KEWP) were not disclosed, leaving questions as to whether Marubeni will retain operational control of the firm or share responsibility with its new partner.

JPS head of communications, Winsome Callum, said Thursday no details were available beyond what was disclosed via a press release this week. But Marubeni announced late lastnight announced that effective April 1, Hisatsugu Hirai was chosen as the new President & CEO of Marubeni Caribbean Power Holdings (MCPH) and Chairman of JPS. Former JPS chairman Tomofumi Tommyí Fukuda, will be returning to Marubeni Tokyo to assume responsibility for Marubeni's domestic power business.

The purchase and sale agreement was signed in Kingston on Tuesday. JPS said the deal should close by the end of June.

The sale to KEWP cuts Marubeni's ownership in JPS back to 40 per cent. The Government of Jamaica maintains its 19.9 per cent stake, held by two state entities - Development Bank of Jamaica and the Accountant General - with 0.1 per cent in the hands of unnamed individuals.

The KEWP-Marubeni agreement was signed before government representative, Energy Minister James Robertson.

The new deal ends the Japanese-owned Marubeni's search for a new equity partner, following the pull out of Abu Dhabi National Energy Company (TAQA), who decided after a year to exit the partnership and refocus assets in Africa. That took effect last week Thursday.

KEWP, which is based in Seoul, was founded in 2001 and operates as a subsidiary of Korea Electric Power Corp, according to information on its website. The company names Lee Gil-Gu as chairman and executive directors Lee Jung-Wun, Lim Han Kyu and Ahn Duk-Yoon as key executives of the firm.

JPS said KEWP is Korea's largest thermal power-generation firm in sales volume and installed capacity, and that it owns and operates more than 9,500 megawatts of power generation facilities in Korea.

The JPS deal is the second transaction between KEWP and Marubeni. The company also acquired Marubeni Sustainable Energy Inc, a US entity largely involved in biomass, last year.

The value of the deal was not ascertained, nor was it clear if the Koreans would be acquiring stakes in Marubeni's other power businesses in Trinidad and Tobago, and Curaçao. TAQA had paid US$320 million for all the Caribbean assets in 2009, of which JPS is among the largest.

TAQA's intention to sell its stake back to Marubeni became public in November. Weeks later, the Marubeni-TAQA consortium announced the sale of its 55.4 per cent interest in Grand Bahama Power Company Limited to Canadian energy firm Emera, in a deal worth US$82 million.

The dissolution of the partnership between TAQA and Marubeni was finalised March 31, with Marubeni reacquiring the assets for US$320 million. It's not clear whether Grand Bahama was factored in that price or the proceeds had been shared otherwise.

Marubeni's Caribbean assets now include JPS, 39 per cent of PowerGen in Trinidad and 25.5 per cent of Curaçoa Utilities Company.

JPS personnel declined comment saying they had no authority to speak on behalf of their Japanese parent company.

JPS manages a grid with 820 MW of capacity, but owns just 640.9 MW. It purchases the rest from contracted independent power producers.

mark.titus@gleanerjm.com