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Jampro hunts investors with deep pockets for J$80b hydro power project

The investment promotions agency, Jampro, is on the hunt for an investor willing to fork out US$930 million needed to finance a power-generation project along the Mahogany Vale River in Jamaica’s Blue Mountains.

It says, however, that the capital infusion, which translates to around J$79.8 billion at current exchange rates, would be spread over a decade.

The scheme is not a new idea, having been on the drawing board for some 43 years, the Financial Gleaner has learned.

With an expected 30 million cubic metres of water storage capacity, the facility would be a needed additional water source for Kingston and surrounding areas, as well as an alternative source of power.

Said Ricardo Durrant, the manager of the manufacturing, energy and mining portfolios at Jampro, the “US$930 million is the estimated expenditure over a 10-year period”.

The Jampro officer could not say what return on investment would be required to make the project a feasible venture.

Yet another pre-feasibility study is required, he said, to estimate it.

“Because it was mooted so long ago, a new study would have to be done to determine its feasibility, which phase will require US$5 million,” Durrant pointed out.

He said a previous study suggested that more than 50 megawatts of power could be generated by the plant, which in the current plans would be build in the second phase of the project.

The pre-feasibility stage, estimated to last 15 months, would determine anew the hydroelectric power potential of the scheme, based on various dam configurations and the total water resources of the Blue Mountains.

That would be followed by first-phase construction, over five years, of a 6.8-kilometre tunnel from the Yallahs River in the Blue Mountains to the Flora River in the Hope River system of the Corporate Area. That phase of the work is budgeted to cost US$85 million.

The second phase would involve the construction of a 90-metre high dam on the Yallahs River at Mahogany Vale, creating a reservoir of about 30 million cubic metres in net storage capacity.

This phase of the project would also include the development of a 55 MW capacity underground power plant near Gordon Town in the hills of St Andrew.

The budget for the construction of the dam and power plant is set at US$460 million, which means an investor would be spending US$8.4 million per megawatt of power created.

According to investor information provided by the government agency, the commissioning of phase two would be governed by the time required for additional studies, financing and construction.

It had previously been estimated that it would be possible to construct and start operations of the second phase after a further four years.

The third phase involves the construction of a 7.5 kilometre trans-mountain tunnel and a conveyance system of 22.2 km of tunnels and 3.8 km of pipelines on the northern side of the Blue Mountains at a cost at US$380 million.

The Mahogany Vale dam was first proposed in a 1967 feasibility report by Howard Humphreys & Sons as a possible solution for augmenting the potable water supply for the city of Kingston.

The project was later said to have been abandoned in favour of the less capital intensive but lower yielding Rio Cobre Water Supply Scheme of the early 1970s.

“The Mahogany Vale Project is an important initiative of the Government to harness more of the island’s abundant water resources whilst generating hydro-electric power for the national energy grid,” says Jampro.

The investment literature said the importance of the project was highlighted given the increasing demand for potable water in the Kingston Metropolitan Area, global oil price movements, and Jamaica’s commitment to environmentally friendly energy practices as a signatory to the Kyoto Protocol.

But another Government agency, the Petroleum Corporation of Jamaica, has noted on its website, that hydropower schemes have high capital costs, and have been sensitive to high interest rate regimes in Jamaica in recent times.

These factors, it said, prohibit private investment in hydro power ventures.

Existing hydro power schemes are located in the Upper White River and Lower White River in St. Mary, Roaring River in Westmoreland, Rio Bueno in Trelawny, Maggotty Falls in St. Elizabeth, and at Constant Spring in St Andrew.

The largest of the lot is Maggotty Falls, which was opened in 1966 and which contributes 6.3 MW of power to the national grid.

Source: Jamaica Gleaner

Category/ies:Jamaica News, Request for Proposals.
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