By Curtis Williams
OGJ Correspondent
PORT OF SPAIN, Dec. 2 -- Trinidad and Tobago is pressing development of gas-fired power generation to support industrialization in the island nation and may be willing to subsidize electricity prices paid by a prospective aluminum investor in order to develop a metals industry.
Energy Minister Eric Williams said tenders would be called shortly for construction of a 425 Mw power plant to support the proposed world-scale aluminum smelter the island has been trying to attract. The $250 million power plant would be built in La Brea on a new industrial estate being developed on the island's southwest coast 8 miles north of the Atlantic LNG plant.
Williams said negotiations "with a global entity" for the integrated smelter were at a delicate stage. Energy industry sources point to Venezuela's state-owned Industria Venezolana de Aluminio SA (Venalum) as the likely sponsor.
The two countries signed a Memorandum of Understanding a few months ago, agreeing to work closely on joint development, including shared natural gas reserves, LNG expansion, a Caribbean gas pipeline, and metals, including steel.
While a smelter likely would lead to development of other downstream industries, industrializing the country and employing thousands, the country has not been able to guarantee proposed investors a natural gas price competitive with cheap electricity from sources such as hydroelectric power.
In August project Prime Minister Patrick Manning told the country's parliament that as part of a deal for a fourth LNG train, BP Trinidad & Tobago LLC (BPTT) would provide the country with 100 MMcfd of free gas that could be used to support the power generation plant during 2003-17, after which a 10% royalty rate would apply.
"This new arrangement will allow the government the flexibility to provide competitive pricing for electricity-intensive industries," Manning said.
The country has been operating on reserve electric power generation capacity and must invest quickly in additional capacity or face power outages and shortages.
Dennis Singh, general manager of the Trinidad and Tobago Electricity Commission, said demand for electricity is 955 Mw during peak use. The power distribution monopoly Powergen, a joint venture of BP PLC, Mirant Corp., and T&TEC, can generate 719 Mw—with a spinning reserve of 100 Mw—while Inncogen, a smaller company, has a power capacity of 195 Mw, at least 90% of which (176 Mw) T&TEC has to take under a take-or-pay contract.
Singh said T&TEC has drawn up plans for additional generation capacity while awaiting word from the government.