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Deal in danger - Azurest faces OUR snub after missing deposit deadline

Published:Friday | October 4, 2013 | 12:00 AM

Anastasia Cunningham, News Coordinator

The Office of Utilities Regulation (OUR) is likely to reject a request for a 15-day extension to Azurest Cambridge Power to pay over the one per cent security bond as the preferred bidder to construct the US$690 million 360-megawatt barge-mounted power plant, sources have told The Gleaner.

Azurest has reportedly asked for the extension, citing that their investors were uncomfortable with the negative response following the company being named the preferred bidder.

Yesterday was the deadline to make the US$6.9 million deposit to the OUR.

According to a reliable source, "Azurest has told the OUR that a combination of factors has led to them asking for the extension. They said their financiers were uncomfortable with the series of negative events that arose out of the awarding of the contract."

The source further told The Gleaner, "some of the negative factors include the fact that the major private-sector groups did not attend the OUR announcement of the preferred bidder and the negative response to them winning the bid. All of this has really made the financiers very uncomfortable."

The source said the principals have asked the OUR to give them time to do their due diligence in Jamaica before they made a commitment to the project.

But Gleaner sources close to the negotiations said the OUR would likely, not be granting that request.

On September 18, the consortium

of five firms - Azurest Partners, Cambridge Project Development, Inergix Corp, Waller Marine and Wartsila - was named the preferred bidder of the four companies which submitted proposals to supply half of Jamaica's energy needs to the national grid.

They were given 15 days to make the deposit to secure the contract and to provide evidence of their ability to execute the project.

Failure to pay the security bond would force the OUR to proceed to offer the opportunity to the next ranked entity, the Hong Kong based Energy World International (EWI), which Contractor General Dirk Harrison had ruled should be excluded from the list of entities to be considered. The Gleaner has learnt that EWI has indicated that it would be willing to come to Jamaica next week to meet with the OUR and to put up its bid bond immediately.

A day after Azurest Cambridge Power was announced as the preferred bidder to build the liquefied natural gas plant, Kenneth Allen, founder and managing director of Azurest Partners, told the gathering at a press conference that they had adequate investors to fund the project.

Allen disclosed that they had commitments from International Finance Corporation, Inter-American Development Bank, Royal Bank of Canada, other global lenders as well as Jamaica-based partners.

However, controversy followed the announcement that the United States-based company was the preferred bidder to construct the 360-megawatt power plant, a critical component of the Government's plans to slash energy cost from the current rate of US$0.42 cents per kilowatt-hour. Azurest Cambridge Power reportedly proposed to provide energy to the national grid at US$0.1390 cents per kilowatt-hour.

Following Harrison's tabling in Parliament of a report that questioned the procurement process, stating that it was handled inappropriately, the Jamaica Chamber of Commerce, Jamaica Manufacturers' Association and the Private Sector Organisation of Jamaica (PSOJ) boycotted OUR's press conference to announce the preferred bidder, calling on the utilities regulation company to fully addressed the concerns highlighted in the OCG's report before making any announcement.

Concerns further mounted about the process used to select the bidder following Tuesday's release of a summary of the Mott MacDonald report.

The international independent consultant, which was hired by the OUR to evaluate the proposals, revealed that none of the bidders achieved the minimum 75 per cent score in the category "ability to finance the project" which they needed to qualify for selection.

Yesterday the PSOJ strongly urged that if Azurest Cambridge failed to meet the deadline, they should be disqualified from the process.

On Wednesday, Opposition Spokesperson on Energy, Gregory Mair declared that the OUR must be prepared to answer questions today at the meeting of the Energy Council, noting that the full Mott MacDonald report needs to be made available, given concerns about how the OUR's decision to select Azurest was arrived at. He said a lack of transparency is the major problem still plaguing the process.

Up to press time, there was still no official word from the OUR on the matter.