New Jamaica power plant to cost US$602M

(Jamaica Gleaner) The Jamaica Public Service Company (JPS) will be spending J$52 billion (US$602 million) for the construction of a new power plant which will add 360 megawatts of generating capacity to the national grid and replace older generating units.

The plant, to be constructed in Old Harbour, St Catherine, is being custom-built to operate on natural gas, with diesel as backup fuel, and is expected to generate employment for more than 2,000 persons during the assembly phase, the JPS said.

“We have given a commitment to reduce electricity rates for the customers of JPS. The investment in the new power plant will make that commitment a reality,” the JPS quoted chairman of Marubeni Caribbean, Hisatsugu Hirai, as saying. He added: “With the construction of this plant, Jamaicans will see a reduction of about 30 per cent in their electricity charges because of the cheaper cost of natural gas, compared to oil, and the greater efficiency of the new generating units.”

The new venture is the result of a partnership between majority shareholders of the company, Marubeni and Korea East West Power (EWP), with JPS as minority partner. “The entities will form a new corporation, which will be responsible for the implementation of the largest construction project for new generating capacity in Jamaica’s history,” the JPS said in a statement Tuesday.

The decision to construct the plant comes on the heels of last week’s award by the Office of Utilities Regulation (OUR) to the JPS of the contract to build a combined cycle modern plant, with new generating capacity of up to 480 megawatts net to the national grid on a build, own and operate basis.

The 360 megawatts of new capacity will be commissioned into service in 2014.

The OUR concurred with the JPS that the project will be one of the largest private-sector investments to be made in Jamaica to modernise and upgrade the electricity sector, which it said “will form the basis for the reduction in the electricity tariffs and growth in the productive sector”. On April 29 this year, the OUR requested proposals for construction of the project, noting that the successful bidder would be required to provide 360 megawatts of capacity by 2014 and the other 120 megawatts by 2016.

Bids were invited from 28 local and international companies, but despite an extension of the deadline, by the new closing date in May, the JPS emerged as the sole bidder.

Requests for proposals were made as part of the goals to ensure that Jamaica improves its energy efficiency in generation, contribute to fuel diversification which will impact energy security and, most importantly, positively impact the affordability of electricity.

The new capacity is intended to replace approximately 292 megawatts of aged plants while the remainder is to be used for load growth, the OUR said.

The use of natural gas, which the JPS had contemplated when it submitted its bid, is in line with initiatives taken by the Government to introduce liquefied natural gas as the fuel of choice for electricity generation and for the mining sector.

The OUR, in its annual report, said that approximately 600 megawatts of additional generating capacity will be required during the next nine years to compensate for load growth and plant retirements.

The first block to construct 65 megawatts was awarded to Jamaica Energy Partners.

JPS board director for EWP, Sang Kie Cho, also indicated that the new project will represent a significant step forward for Jamaica. “This will be the single largest investment in Jamaica by any company. It is an indication of our commitment to Jamaica’s long-term development. The power plant project will stimulate the economy both directly and indirectly,” he said.

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