US$16M Sourced to Construct Wigton Wind Farm

The House of Representatives yesterday approved a government guarantee to secure a US$16 million loan from the National Commercial Bank (NCB) for the Petroleum Corporation of Jamaica (PCJ), which will be used to construct and establish the Wigton Wind Farm in Manchester.
State Minister in the Ministry of Finance and Planning, Fitz Jackson who piloted the resolution, explained that through its wholly-owned subsidiary, Wigton Farm Limited, the PCJ would operate the Windfarm which was expected to have an output capacity of 20.7 mega watts of energy and provide an average of seven mega watts.
He further detailed that the project aimed to implement provisions of the Jamaica Energy Sector Policy regarding renewable energy sources; save on the country’s annual oil bill; utilize indigenous sustainable energy resources, and reduce petroleum based imports.
Other objectives, he said, were to reduce emissions and transfer technology to the island with the opportunity for local expertise and experience with a large scale wind energy project, as well as establish tangible and affirmative action from Jamaica as a signatory of the United Nations Framework Convention on Climate Change (UNFCC), regarding the reduction of greenhouse gases.
The project will also provide educational and research opportunities for the University of the West Indies (UWI), the University of Technology and the Scientific Research Council.
Mr. Jackson said the agreements under the project provided for the sale of electricity generated by the wind farm to the Jamaica Public Service Company (JPSCo) through a Power Purchase Agreement under which the light and power company would pay a fixed rate of US$5.6 cents per kilowatt hour for the first five years and US$5.051 cents per kilowatt for the next 15 years.
Agreements are also in place for the use of land on which the wind farm will be constructed, and project management services during construction of the wind farm. The project is being managed by Renewable Energy Systems Limited, a British company, which will also be responsible for subcontracting aspects of the construction to local and or foreign contractors.
Speaking to the issue of credit risk, Mr. Jackson told his colleagues in the House that the PCJ was not exposed to any credit risk and that the Corporation had been a viable entity over the years, as a review of financial results for 2000/01 to 2002/03 confirmed this. “The entity has maintained adequate liquidity levels and has been honouring its financial obligations,” Mr. Jackson stated.
He outlined that cash flow projections for Wigton had indicated that the company would be able to sustain itself generating an average output of 62.97 GWh (gigawatt hour) of power at US5.2825 cents, resulting in a revenue of approximately US$3.33 million per year to yield a total revenue of US$39.96 million at the end of 12 years.
The total cost of the project is estimated at US$25 million for a period of 13.5 years with an interest rate of 5.0 per cent per reset quarterly and repayment is 48 equal quarterly installments beginning 18 months from the date of first disbursement.