Prime Minister Dr. Luc Mercelina addressing MPs on Tuesday.
~ 20mw to be leased to own for $7.7M ~
PHILIPSBURG--Consumers in St Maarten are expected to get relief in about five weeks from the frequent load-shedding currently gripping the country, thanks to a decision taken to rent 10-megawatt (mw) container generators and lease to own 20mw container generators for US $7.7 million.
In the interim, six large properties including five major hotels, have agreed to disconnect from the electricity grid at different intervals around the clock to help free up 4mw electricity which would help GEBE alleviate the load-shedding (see related story). Additionally, generator 8 that was damaged during the recent fire will be back in operation soon, adding an additional 3 megawatts to the system. The container generator rental agreement, large properties disconnecting from the grid and getting generator 8 back online would add 17 megawatts of energy to the system.
Prime Minister Dr. Luc Mercelina provided the information to Members of Parliament (MPs) on Tuesday during the continuation of a meeting on the electricity crisis. While some MPs lauded Mercelina for finally presenting a package of solutions, some MPs were not in agreement.
NOW MP Christophe Emmanuel, who recently proposed that government use containerised Cummins generators from Eco-Stone Construction and Engineering to mitigate the immediate power generation shortfall, on Tuesday distanced himself from government’s approach to the crisis, saying the solutions were not sustainable and will cost the government. “I want nothing to do with their approach and their solution,” Emmanuel said during the meeting.
Mercelina explained that Eco-Stone was not selected because it wanted a large 65 percent down payment and the balance to be paid after.
PFP MP Melissa Gumbs said she has very little faith in GEBE and the lack of information from the company to entities like GridMarket, noting that “maybe some heads should roll,” a sentiment shared by Emmanuel, who said government should get rid of GEBE’s management and supervisory boards.
MPs during Tuesday’s meeting.
Container generators rental
In a detailed explanation of the immediate solution, Mercelina said the 10mw container generators, the rental of which will be paid for by today, Wednesday, are diesel generators of the Caterpillar brand. They are expected to take five weeks from today to become operational – 14 days to arrive in the country and three weeks to be connected to GEBE’s grid. The generators, which will be rented for a period of three months, are being provided via Maimi-based company SoEnergy International.
Mercelina explained that 7-10 20-foot containers will arrive in the country with the 10mw generators. So-Energy probably will send the generators to St Maarten from its locations in the Caribbean which have the containerised generators. Mercelina said he understands that the company has several in Colombia.
Each container has generators that can supply either 1mw or 1.5mw of electricity and the company will decide what combination will be sent. Fuel consumption is not included in the deal. However, included in the package are personnel for the installation of the generator units and for the operation of the container generators for the duration of the rental contract period. St Maarten will also receive fuel tank storage for three days. The 10mw container generators come with factory warranty.
The overall cost of the containerised generator rental is $1,942,150. This includes a mobilisation fee of $553,400; monthly rental cost averaging $378,500; total rental cost $1,135,500 and the demobilisation fee to return the generators after the rental period has expired $253,250.
“The nice part of this deal is that we are going to rent them for three months and actually they are giving us eight months to spread the payment for the rental deal. … This means there will be no immediate impact on GEBE’s liquidity.”
According to Mercelina, part of the immediate solution is to get generator 8 that was damaged when unit 9 caught fire recently back in operation. “The way it’s progressing [with the] intervention by the Technical Department, it is expected to be operational by July 15, 2024. Getting this generator 8 operational again is going to add another 3 megawatts to the grid,” Mercelina told MPs.
“With this 10mw of container generators, load-shedding will be mitigated or eliminated in 5 weeks’ time from now. The inclusion of personnel in the cost ensures that the generators will be operational as quickly as possible. We are going to get an additional 3 days of storage tank for [fuel] storage as it can be a crucial factor in the contingency,” Mercelina explained.
Lease-to-own container generators
The short-term solution presented to MPs is to lease-to-own a total of 18 20-foot-container Cummins generators from the company CMEC over a 36-month period (three years) at a 6 percent financing rate. These will be diesel generators with a lifespan of approximately 20 to 30 years. The generators should be in the country within six weeks and are expected to be connected to the GEBE grid and become operational in three weeks. Personnel will be provided for installation and guidance for a 30-day training of GEBE personnel. Three days of fuel tank storage will also be provided.
A down payment of $1,071,750, which is 15 percent of the cost of the lease-to-own generators, was made on Friday, June 21. The monthly payment will be an average of $184,760 and the total balance excluding the down payment is $6,651,360. The total cost for the rent-to-own deal is $7,723,110. Fuel is not included.
“With 20mw container generators’ capacity, load-shedding will be mitigated or eliminated. Secondly, it fits best financially with the liquidity of GEBE,” said Mercelina.
The container generators are brand new with a 2024 production year, with zero hours. There is a 15-month factory warranty, which is 15 months after arrival, 12 months after installation or 1,000 running hours, whichever occurs first. There is no prepayment penalty and the generators can be paid off early, if finances allow, without incurring a penalty.
Mercelina said the addition of diesel generator 8 and the 20-megawatt containers that will be leased to own will add 23 megawatts to the grid.
Long term solution
Mercelina also elaborated on the long-term solutions, which include the ordering and purchase of three new 9-megawatt Wärtsilä generators. The three generators will add 27mw electricity to the grid and will be a combination of diesel and heavy fuel oil generators. The three generators will cost approximately $42 million – approximately US $14 million per generator.
Once a down payment has been made, it will take 18 to 24 months for the generators to arrive in the country and become operational. In terms of financing for the three generators, Mercelina explained that negotiations are being held with a local consortium group. Government has also initiated negotiations with BZK.
As it relates to generator 19, which has a crankshaft issue, Mercelina explained that tests are currently being conducted on the crankshaft. A total of three “annealing processes” will be being conducted as part of this process, two of which have been completed. The annealing process occurs when heat is applied to the shaft in a controlled manner and held for a period of time before being cooled in an equally controlled manner. The purpose is to restore its original material composition by reducing hardness and to get an idea on the quality of the consistency of the metal.
The third annealing process began on Wednesday, June 19, and is expected to be completed in about 10 days. If the annealing process is successful the generator will be operational by the end of July. If it is unsuccessful a new crank shaft will have to be purchased and the generator will then be operational by the end of December 2024.
Mercelina also spoke about the future vision for alternative energy which he said would require funding. GEBE has engaged with the World Bank and EnergyNautics and there is cooperation and collaboration with BZK Ministry for access to the Growth Fund; Borgstellingsregeling Midden en Kleinbedrif BKMB; SDE++; transition incentive SDE++ which provides subsidies to companies and non-profit organisations that generate large scale renewable energy or reduce CO2 emissions; and the European Bank.
