Private Power Policy Framework
USAID engaged K&M to assist the Institución de Recursos Hidraúlicos y Electrificación (IRHE) to develop the financial, technical, commercial, policy principles and documentation required to enable private power development in Panama. K&M’s scope of work included an assessment of the legal and regulatory barriers to private investment in power, development of policy recommendations to remove these barriers, and extensive capacity building for IRHE staff on preparation, procurement and implementation of privately financed power projects.
K&M was engaged by USAID to serve as IPP consultant for the private sector rehabilitation, lease and operation of the 100 MW San Francisco Private Power Project in Panama City. K&M assisted the Institución de Recursos Hidraúlicos y Electrificación (IRHE) by identifying changes to the legal and regulatory framework needed to enable IPPs, preparing the bid documents, and drafting project agreements. The project agreement became the model document for attracting private sector participation in the energy sector and provided the initial framework for power sector reform in Panama.
K&M was engaged by IRHE, the national electric utility of Panama, to perform technical and financial due diligence evaluation of international tender offers for the turnkey rehabilitation and new capacity addition of the 130 MW Central 9 de Enero combined cycle power plant at Bahía de las Minas. Specifically, K&M evaluated adequacy of turbo-generator controls, whether the equipment fulfilled the necessary technical requirements of the plant and followed the terms of the RFP, and if the general standards for control (both manual and computerized) were compatible with the plant to receive and transmit the required dispatching information.
Through the Private Power Technical Assistance program in Panama, K&M assisted the Institución de Recursos Hidráulicos y Electrificación (IRHE), the Panamanian electricity authority, in selection of a private developer for rehabilitation of their 50 MW plant. A preliminary set of bidding documents and power purchase agreements were also prepared.
K&M was engaged by the National Dispatch Center (CND) to verify the operating and cost data provided by six generating companies. The objective of this audit was to independently validate data that CND will use to dispatch plants based on their marginal cost. Marginal costs were calculated based on plant generation costs, technical restrictions such as minimum and maximum loads, startup times, ramp rates, etc. Generating companies report these data to CND for each generating unit. K&M did a technical audit of six thermal units: Bahia Las Minas 120 MW steam cycle, Bahia Las Minas 161 MW combined cycle, AES 42 MW simple cycle gas turbine, COPESA 44 MW simple cycle gas turbine, PanAm 96 MW diesel, and Petroelectrica 55 MW diesel.
Pan Am Generating Ltd. owns and operates the La Chorerra IPP in Panama, which provides 96 MW of generating capacity using six Wärtsilä 18V46B reciprocating engines. Pan Am Generating Ltd. engaged K&M to conduct an operations audit of the La Chorerra plant to support its request to the Panamanian System Operator for the plant’s minimum dispatch rating to be increased from 50% to 75% of its rated capacity (per engine). K&M reviewed previous technical audits and reports cataloguing the plant’s historical operating performance and equipment failures. K&M reviewed the plant’s current operating practices and conducted an on-site inspection of the facility. K&M diagnosed operating problems regarding turbocharger washing frequency, increased particulate matter, and decreased dispatch loads to support the operator’s request for a higher minimum dispatch rating.
K&M was engaged by a private power plant developer to assist with negotiating the EPC contract for a 89 MW HFO-fired thermal power plant in Panama. K&M performed a full commercial and technical review of the EPC contract to assess the contract’s provisions against the power plant’s operating requirements and commercial contractual arrangements. The K&M team provided in-person support to the project developer through participation in the contract negotiations, which were successfully concluded. The EPC contract was signed by all parties and the project is under development.
K&M was engaged by a private investor to assist with a comprehensive technical and commercial due diligence to assess and value a potential acquisition of four power generation assets in Jamaica and Panama. The assets are HFO-fired reciprocating engines totaling 243.5 MW of capacity, of which 190 MW is contracted under PPAs in Jamaica and 53.5 MW operates in the Panamanian power market.
K&M was tasked with reviewing all technical and commercial aspects of the plant’s operations and with building a project finance valuation model to value the assets. K&M evaluated the technical performance of each power plant, which included engineering reviews of all operations, maintenance, and performance documentation and conducting on-site inspections of the plants. K&M built and delivered a project finance model of the assets, which included deriving and verifying all financial, commercial, and operational inputs, performing sensitivity analysis, and supporting the acquisition team with the determination of the client’s final and binding offer for the assets.
The objective of this study is to estimate the cost of LNG transported in truck from an existing LNG import terminal in Panama to large energy users in Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala.
K&M developed a cost model to estimate the cost per MMBtu of transporting small amounts of LNG from an LNG Terminal to each of the countries using LNG trucks and trailers, and multimodal transport (by road and sea) in ISO containers. K&M provided recommendations on the optimal option for transporting LNG. The study also reviewed risks related to relevant trade, tax, and environmental regulations that could affect the cost and/or time of transporting the LNG.
CAF contracted K&M to carry out an analysis with the objective of providing recommendations to the incoming authorities of the national government on how to develop infrastructure projects. For each infrastructure sector, K&M carried out an analysis of current quality of service and efficiency, identified barriers to improving the sector’s performance and contribution to the country’s development, and made recommendations for overcoming those barriers.