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Jamaica’s largest power project hits financial close

Sponsored by two North Asian investors and the Jamaican government, the 194MW gas-fired facility has secured over $200m in project financing from domestic lenders.

A joint venture between Marubeni Corporation, Korea East-West Power Company and the government of Jamaica has achieved financial close on a 194MW gas-fired power project. 

The milestone was reached after the Japanese trading house and the Korean utility acquired a stake in Jamaica Public Service Company, a power utility that was previously owned solely by the state. Marubeni and Korean East-West Power now own 40 percent of JPS, with the remaining stake held by the government.

The partners have since set up South Jamaica Power Company, the project company responsible for building the $330 million Old Harbour Project. The facility will replace existing oil-fired power plants which JPS owns and operates with a gas-fired power station, in an effort to diversify Jamaica’s fuel sources. 

JPS owns 50 percent of the project company while the two Asian entities each hold a 25 percent direct stake, or a 45 percent share including indirect investment through JPS in the gas-fired scheme. 

Scheduled to become operational in May 2019, the project will sell its electricity to JPS under a 20-year power purchase agreement. It will be the largest power plant in Jamaica, providing about 20 percent of the country’s electricity, according to Norton Rose Fulbright, adviser to the project financing parties including the National Commercial Bank of Jamaica, JCSD Trustee Services and others. 

“Over $200 million of the total project will be raised from project finance led by a Jamaican commercial bank, making it the largest private sector project financing in Jamaican history,” said Marubeni. 

“The Old Harbour IPP is a complex transaction as the IPP is being financed separately from LNG/gas handling infrastructure and supply project. The financing for the power station involves a combination of construction phase, project bond financing, together with a senior loan tranche provided by commercial lenders making it quite unique,” said Charles Whitney, a partner at NRF. 

The project is also the second plant to operate on gas imported via LNG and only the first to be developed and financed on a greenfield basis, added the law firm.