Jamaica JCSDTS CHP Project NFE Jamalco
Latin America and the CaribbeanOctober 22, 2020
The Clarendon CHP project is a combined heat and power in construction stage, located in a site provided by Jamalco, adjacent to the Jamalco alumina refinery, in Clarendon, Jamaica. The CHP plant will operate on natural gas as its main fuel, and ADO (automotive diesel oil) as backup fuel, for the purpose of supplying in its Phase 1 approximately 94 MW (net) of electric power to the Jamaica Public Service Company (JPS) and approximately 300,000 lb/hr. of steam at 900 degrees Fahrenheit and 900 psig of pressure to the Jamalco alumina refinery production process. Phase 1 of the project includes installation of two (2) Siemens SGT 800 gas turbines, two heat recovery steam generators (HRSGs), and their associated equipment. JCSD Trustee Services Ltd. is the Trustee appointed by the lenders in a USD $185 million bond issue transaction to finance the Clarendon CHP project.
Under the first phase, K&M was required to conduct a technical validation of three conditions agreed as pre-requisites for valuation and disbursement of a second tranche of funds to the Project: a) achievement of mechanical completion, b) capability of producing power, and c) commencement of commissioning and testing. K&M reviewed relevant project documents and contracts; conducted a site visit to interview the construction management staff and to verify the progress of the works; and finally prepared a report with a summary of findings and conclusions.
In the second phase, K&M was required to review and validate a Valuation Report submitted to the Lenders by the owner and developer of the CHP plant. K&M reviewed the Valuation Report; reviewed the CHP project financial models submitted by the project company; reviewed relevant sections of the project agreements and financial agreements; and finally prepared a report with the main findings, conclusions, and K&M’s independent opinion on the reasonableness of the CHP plant Valuation Report, the financial model assumptions , and compliance with the requirements of Tranche 1B Bond Issuance Condition.