JPS hunts financing for LNG plant
Published:Sunday | March 11, 2012 | 12:00 AM
The Jamaica Public Service Company (JPS) and its project partners are seeking funding from export credit agencies and development financing agencies to conclude financing arrangements for its 360 megawatt LNG-fired plant.
Construction is expected to begin December 2012.
The planned US$620 million (J$54 billion) combined cycle plant is expected to reduce electricity rates by 30 to 40 per cent over the next two-and-a-half years.
JPS and its two majority owners, Korea East West Power and Marubeni are each expected to own a piece of the plant, which well-placed sources say will be operated as an independent power provider or IPP.
The partners are seeking a financing mix of "70 per cent debt and 30 per cent equity and are in discussion with export credit agencies and development financing agencies in this regard," said Winsome Callum, JPS head of corporate communications.
The company will need to borrow US$434 million (J$38 billion) for the project.
"JPS and its shareholders are looking at 10-year financing arrangements, at a minimum. It is expected that by June 2012, the Government would have finalised arrangements for liquefied natural gas (LNG). If this schedule is maintained, we expect to break ground by December," Callum said.
The LNG plant is expected to bring rates charged by the company down to the third lowest in the Caribbean, behind Trinidad and Tobago and Surniname.
Residential customers in Jamaica are paying rates of 34.86 US cents per kilowatt-hour, compared to 5.75 US cents in Trinidad and Tobago and 4.6 US cents in Suriname, according to the June 2011 CARLIEC Survey.
To fulfil its promise of 40 per cent rate reduction, JPS must bring the new rates to below 15 US cents, which is the rate paid in The Bahamas, the country with the third lowest rate in the region.
JPS says it currently owns 40 per cent or 25MW of the renewable energy supplying the national grid, and is investing US$26 Million (J$2 billion), this year to double the capacity at its Maggotty hydro plant.