EWI short on money, so how will they finance the project?

Continuing from my previous post on Saturday, Oct 5, 2013 it is very clear that EWI will not be in a position to finance this major US$737M project and its parent company EWC if the were to pledge all possible asset, would still fall short, so how on earth are they going to finance this project.

From where I sit EWI has two options for financing, one is forming a joint partnership with another firm/group or seek loan and have the GOJ stand security for this loan.

I have read in the Jamaica Observer that the Chairman and CEO of EWC , is likely to visit the county next week and in the process will most likely pay over the bid bond. I also suspect they will meet with the local consortium of Energize Jamaica .who scored pretty high in the ability to finance the project and have some discussion about forming a joint partnership. This would allow the local guys to put up their equity for a part of the company and leverage their other business to secure the remainder of the loan required to finance the business.  If I am correct and they proceed down this path we could see Energize Jamaica getting a substantial stake in the power plant.

Now the other option would see the Government of Jamaica becoming involved in providing security for a substantial loan from the China Exim Bank, made to EWC on the behalf of EWI.

The IMF would balk at any such arrangement, but with some creative moves, this would not show up on the GOJ books and instead what becomes reported is the China Exim Bank has decided to loan EWC a substantial amount of money , which would become their equity in the firm. EWI would then most likely engage the services of CHEC  who would partner with their (EWC) construction arm Slipform Engineering HK Ltd to assit them with the construction of the plant thus saving some cost.  CHEC already has massive amout of equipment in the country as well as workers and in so doing, EWI  would not import a bunch of other expertise outside of the power plant folks, who will ensure the plant is being built to proper specification.

Now  I will go a bit  further into the realms of further speculation as without hard data I just have to try and figure out what appears to be a maze here.  EWC is a Hong Kong based company and Hong Kong is now under Chinese rule, anyone see where I am going here.

The EWI led team would allow China to enter the lucrative power generation facility in Jamaica and let’s face it the Chinese are currently the only ones out their who could finance such a massive project without breaking a sweat. The other thing is EWI would no doubt form part of China long-term and strategic position in Jamaica and here is why.

This power plant more than likely will be located in Old Harbour bay close to where JPS and JEP has other power generation facilities.  China plans to put up a US$1.5B transshipment facility on Goat Island, which is very close in proximity to where I believe this plant will be located . This US$1.5B facility will no doubt require a lot of power, so how best to have your power than to invest in or have a substantial interest in a massive power plant project.

So here is how it is playing out and how the die appeared to have been cast.

China needed goat island

China needed source of cheap power.

EWI has the expertise to deliver such a plant, but have no money to do so.

Well that  leaves the following. Jamaican needs the Chinese investment in a transshipment hub, but that hub must be located close to a power plant that can provide cheaper power than what currently obtains.

In order for Jamaica to get this investment , China needed Goat Islands , which is of strategic importance as we shall see later on. In addition China needs a reliable and cheaper source of electricity.

The Chinese are not about to leave anything to chance and have some USA consortium have a strangle hold on them i terms of power delivery and this is what I believe led to EWI becoming involved in the process.

So EWI somehow had to win the bid to construct the power plant and China have to get goat island and in exchange we well see China investment of US$1.5B in the transshipment port and a further $650m investment in the EWI power plant via the China Exim bank, thus putting in a combined invest by China of over US$2.15b or over J$215B.

So OUR energy minister had to deliver EWI and the Prime Minister must deliver Goat Islands and  this will now pave the way for the government to announce within weeks maybe days, that the Chinese will be allowed to proceed with that very important transshipment facility at GOAT ISLANDS.

Watch and see how this all play out folks, I really think I have unmasked the chess game and hopefully would have allowed a new perspective on this energy project and Goat Island, even if I am eventually proven to be wrong, but I seriously doubt I am wrong on this one.

Let’s wait and see.