Jamaica - Petroleum Corporation of Jamaica to sell US$ 25m wind farm

The Petroleum Corporation of Jamaica (PCJ) has put up for sale its 20.7 megawatt capacity Wigton Windfarm Limited, the price of which will be determined by the winning bid.

The PCJ, however, is unlikely to look favourably at an offer that is below the US$25.5 million - when then approximated J$1.55 billion - invested in building the Manchester-based plant back in 2004. Its fixed assets, including 23 wind turbines each rated at 900 kilowatts, have a carrying value of $1.38 billion on its balance sheet, according to the company's unaudited year-end financial results to March 2007.

Buy as total entity - "What we are looking for are persons who will buy the wind farm in total as an entity, or partner with PCJ in the ownership - either a joint-venture going forward or buying it outright," said PCJ consultant and former head of the statutory agency, Dr. Raymond Wright. The sale comes alongside a turnaround in Wigton's profit position, the wind farm having recorded net income of $33 million in the year just ended, compared to the $28.3 million loss it posted up to March 2006. Money from the divestment would be used to develop other energy projects. Wigton was built by British firm Renewable Energy Systems in April 2004. It sits on 683 acres located in Manchester.

Successful operation - Wright says the wind farm has been operating successfully, but notes that the returns have been small due to the low price - 5.6 cents US for every kilowatt hour of energy produced in the first five years of operation and 5.051 US cents thereafter up to year 20 - it gets from monopoly electricity distributor Jamaica Public Service Company for the power supplied to the national grid. This year, for example, Wigton is projecting depressed revenues of $198.86 million (2006/07: $220.96 million), according to Finance Ministry figures, while its net profit is expected to fall to $12.57 million or a third of its current position. Two years ago, the company added emission trading to its revenue mix, selling its carbon credits to the Dutch government under a nine-year agreement under which it is paid €5.5 for every tonne of carbon dioxide saved.

The wind farm has saved some 39,792 tonnes of carbon dioxide emissions over the period April 2006 and January 2007, which would have translated to earnings of €218,856. PCJ began advertising Wigton on the weekend, saying it was seeking investors with "expertise in the development, management and operation of renewable energy and power generation facilities." The selected buyer will also be expected to invest in expanding wind-farm generation.

Wind now accounts for 2.5 per cent of Jamaica's renewable energy source and goes up to 5.0 per cent when combined with hydro-power. "Part of the (condition) is that the wind farm should be expanded on site. The sale is an integral part of the expansion. It would be a requirement that the buyer expands," said Wright. Wigton itself has already developed a plan to expand the wind park but the project is subject to the finalisation of an environmental impact assessment study.