Jamalco Energy and Financial Advisory Services
K&M was hired by a private client to provide a detailed analysis on the viability of Noble Group Holdings Limited using publicly available information or information provided by the Client. K&M research will include market intelligence of the recent restructuring of Noble Group. An understanding of the recent changes in the organization and their shareholders strategy will also be provided.
K&M was engaged by the World Bank to assist the Jamaica Public Service Company (JPSC) to structure, competitively procure and negotiate the 60 MW Rockfort IPP. The project is located in an industrial area at Kingston Harbor, and consists of 3×20 MW low speed MHI diesel units and all associated support facilities. The generators are of a two stroke valveless design and use heavy fuel oil. K&M’s work was organized in two phases.
During Phase I K&M reviewed the existing legal, regulatory and institutional framework and identified specific constraints to be addressed before private power projects could be realized. During Phase II K&M analyzed the project’s feasibility; drafted and issued prequalification documents; identified, analyzed and allocated risks; developed the contractual structure; draft tender documents and project agreements; supervised the tendering process; and participated in the bid evaluation, developer selection and contract negotiations.
This was the first IPP in the Caribbean and in Jamaica to reach financial close. A principle feature of the financing package was a credit enhancement to facilitate use of Caribbean Basin Projects Financing Authority (CARIFA) 936 bond financing. Additionally, the project secured the first financing offered by Jamaica’s newly established Private Sector Energy Fund, which was developed by the World Bank to promote and facilitate private sector participation in energy development. The US$114 million project reached financial close in 1994 and commercial operation in 1996.
K&M was engaged by USAID to assist the Jamaica Public Service Company, Ltd., the state-utility, to establish the regulatory and technical conditions necessary for the development of private power projects on a turnkey basis. K&M’s scope of work included: identifying regulatory and legal barriers, prepared pre-qualification notices and documents used to short-list project developers, establishing evaluation criteria for the prequalification process, preparing construction contracts, preparing tender documents, and writing Implementation and Power Purchase Agreements. Directly resulting from K&M’s work, the Jamaica Public Service Company procured private turnkey contracts for over 200 MW of additional capacity to its system. This represented an approximate 37% increase in installed capacity over the entire national grid system.
K&M served as Owner’s Engineer to the Jamaica Public Service Company (JPSC) for implementation of its Hunt’s Bay Power Project, a $23.2 million, 33 MW facility. K&M was responsible for startup and commissioning of the plant. K&M organized an international competitive selection process for the EPC contractor, and evaluated/selected the turnkey contractor according to World Bank standards. K&M brought the project to completion, from initial feasibility study to operation, in under 1-1/2 years on time and on budget.
The project was performed in two phases. In Phase I, technical services included: project feasibility study, conceptual design, bid package documents preparation, proposals evaluation, developer recommendation, and final EPC contract preparation. In Phase II, technical services included: design review, construction services oversight, and overall quality control for plant construction and start-up. The EPC contractor was the firm of Wallace O’Connor from Texas using local Sub-contractors.
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.
K&M was engaged by the Lenders to the 190 MW Old Harbour power plant to provide Independent Engineer services. K&M’s engagement is with JCSD—the trustee appointed by the Lenders. The lead Lender is the National Commercial Bank of Jamaica. K&M will: conduct project implementation status and site visits; advise Lenders in regards to any construction variation or change orders; monitor the actual expenditures under the EPC Contract, including variation, claims or change orders, against budgeted expenditures and estimate future expenditures based on project reports provided by the Owner; review the EPC contractor’s milestone or drawdown requests and supporting documentation; prepare the punch lists; review testing methodology and schedule based on the performance testing procedures specified in the EPC Contract, PPA and other documents; provide written certificates to the Lenders confirming when the Project has achieved Commercial Operation Date, fulfilled Reliability Test and achieved Final Acceptance of the Facilities; and prepare all necessary reports.
K&M was engaged by the Lenders to the 190 MW Old Harbour power plant to provide Independent Valuation services. K&M’s engagement is with JCSD—the trustee appointed by the Lenders. The lead Lender is the National Commercial Bank of Jamaica. K&M will calculate during the construction and operating periods the loan-to-value (LTV) ratio of the project. During the operating period the value will be estimated using a discounted cashflow (DCF) approach using the Financial Model agreed at financial close, adjusted based on K&M’s review of the Project Documents and reports at the time of valuation.
K&M was retained as the Lender’s Engineer by the prospective senior lender to a 190 MW gas-fired combined cycle power plant in the Caribbean. The plant will use Liquefied Natural Gas (LNG) delivered through a Floating Storage and Regasification Unit (FSRU). In the first phase of the project, K&M provided technical, commercial, and financial due diligence of the project. K&M reviewed all major project contracts, evaluated the plant’s technical and performance specifications, and performed a comprehensive financial model review, which included evaluating technical assumptions, verifying the model’s calculations of contractual obligations, and providing recommendations for sensitivity analysis. K&M also advised the lender on risk allocations and providing inputs to terms in the project financing agreements. In the second phase of the project, K&M provided construction monitoring services and advice to the lender regarding EPC contractor milestones and drawdown requests. K&M also produced reports covering work quality, change order requests, schedule and cost deviations, and performance testing prior to the commissioning of the plant.
he Client, NCB Capital Markets was engaged as arrangers of a US$185-million bond issue for NFE South Power Holdings Ltd., an entity that will own the JAMALCO Combined Heat and Power (CHP) Plant located in Clarendon, Jamaica. The 94 MW plant is set up to provide power to the local utility, and steam to JAMALCO, a bauxite mining and alumina production company also located in Clarendon, Jamaica.
As part of the condition of the Client’s board approval, the Client engaged K&M to provide the services of an Independent Technical Advisor to validate the technical information received from the Owner in regard to the current status of the project construction and the value of the construction work completed up to date, among other things.
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.