Wisynco plans J$1b energy plant
Published:Wednesday | December 21, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Large distributor Wisynco Group says it will invest close to J$1 billion next year in a new energy plant at its St Catherine complex aimed at slashing production costs.
Concurrently, Managing Director William Mahfood said that Wisynco would refrain from listing on the Jamaica Stock Exchange in order to focus on growth amid concerns of possible re-emergence of local and global recession.
"At this time we are not in any position to list. The timing is not right," he said, later revealing that profit has declined year on year based on recessionary pressures on consumers and added taxation.
Mahfood said the group was too large to list on the Junior Stock Market and would require splitting its divisions - beverages, grocery, non-grocery and distribution - into separate companies to meet small-size listing requirements.
The group distributes Coca Cola, Red Bull, Ocean Spray and some 110 brands with over 4,000 different products covering beverages, grocery and synthetic items; and holds franchises for restaurants Wendy's and Domino's Pizza. It also bottles and distributes its own proprietary brands, Wata and Bigga.
The energy plant would represent the largest investment in years at the privately owned company.
"We are close to finalising the negotiations for investment in an energy-generating facility," said Wisynco Managing Director William Mahfood.
"This could be the most significant investment in a long time and would be close to J$1 billion based on infrastructure, equipment and works. It will ... drive further efficiency and reduce energy costs," Mahfood told Wednesday Business.
The ongoing negotiations centre on the utilisation of natural gas or petcoke as the fuel source.
"A final decision on the project will be made within a month," said Mahfood who explained that it would take about 12 months after the decision to implement the project.
Water-treatment facility
The plant would produce energy and also reuse the carbon dioxide and heat exhaust as auxiliary energy. It will also include a new water-treatment facility to reduce water waste to "zero".
"Basically, the plant will mean the lowering of our production costs," he said, adding that specific savings are yet to be determined as that would include factoring the fuel source. "We haven't yet done all the analysis, but the projections look pretty good based on the rising price of oil fuel."
The Jamaica Public Service Company (JPS), which holds a monopoly on power distribution, utilises fossil fuel as its main fuel source. The cost of the electricity supplied by JPS is among the highest in the region at about US 30-40 cents per kilowatt hour.
Oil prices hit US$97 a barrel on Tuesday, compared with their 10-year low under US$40 in 2005 and above US$140 in mid-2008, according to the US-based Nasdaq commodity price listing.
To address oil fluctuations, the JPS is investing J$52 billion (US$602 million) in a new 360 megawatt power plant, which will operate on natural gas with diesel as backup fuel. It is expected to generate employment for more than 2,000 persons during the assembly phase, the JPS said. The 360 megawatts of new capacity will be commissioned into service in 2014.