In a short meeting Thursday with just one action item on the agenda, the V.I. Water and Power Authority’s board spent most of its time going over the status and timeline of the authority’s ongoing propane conversion project.
The authority’s partnership with Vitol Virgin Islands Corp was made official in late July with the signing of a contract that provides for Vitol to finance all upfront costs associated with the project, including the construction of infrastructure needed to deliver, receive and store the propane, and with the conversion of WAPA’s turbines by General Electric to burn both propone and diesel fuel.
According to WAPA Executive Director Hugo Hodge Jr., the authority will only begin paying in 2014, once the propane is delivered. At that point, WAPA will be metered and will be charged for whatever fuel is used to make power.
Meanwhile, the capital cost of new facilities on St. Thomas and St. Croix will be amortized over seven years – with an option for complete repayment by WAPA after five years.
At WAPA’s board meeting in October, board members approved a slight change to the contract between the authority, Vitol, GE International and GE Parts International, which would give WAPA more oversight during the conversion process and ensure that all guarantees and warranties are passed directly on to WAPA instead of a third party.
During the meeting Thursday, Hodge and Vitol’s on-site project manager Richard Elliott also told board members that, as the project moves forward, much of the workforce – including contractors, administrative staff and support staff – will be hired locally. Subcontracts are currently being negotiated, they said.
At this point, Vitol has provided approximately 54 percent of the project budget or about $91 million.
WAPA board members showed their support for the project as Hodge spoke, with acting board chairwoman Juanita Young saying that the project is "not only in the citizens’ best interest, but ours as well," as the authority moves toward bringing electric costs down as quickly as possible.
Hodge said that the group has also:
-completed the project’s front end engineering and design (FEED) phase;
-been working on procurement, permitting and safety studies to allow construction to begin;
-asked Planning and Natural Resources for a review of WAPA’s Coastal Zone Management land and water permit applications – needed for demolition, electrical and plumbing work, and construction;
-filed major land and water, along with Army Corps of Engineers permits for both St. Thomas and St. Croix projects;
-filed a letter of intent with the U.S. Coast Guard to transport the propone through territorial waters;
-been working with employees on training and emergency response, and is developing a fire protection plan for the plants;
-and made sure that firefighting systems for the plants will be compliant with National Fire Protection Association mandates.
"WAPA’s conversion to propane is progressing according to plan and in a very short time we have reached several critical project milestones," Hodge said Thursday. "Significant progress has been made with the completion of the front end engineering and design of the project, as well as on the safety features, contractual negotiations, procurement and overall planning.”
He said a management team from Vitol is “now on the ground in the Virgin Islands working hand in hand with WAPA personnel to drive the project forward.”
“Eighteen propane storage tanks are literally under construction as we speak,” Hodge said.
In other business, WAPA board members unanimously approved the reprogramming of $700,000 from a Feeder 11 cable upgrade project to complete the undergrounding of overhead lines on Backstreet in St. Thomas.
WAPA received $500,000 in grant funds to complete the Backstreet project, which is estimated to cost $1.2 million.
Board members at Thursday’s meeting were Young, Noel Loftus, Karl Knight, Alicia Barnes, Elizabeth Armstrong, Cheryl Boynes-Jackson and Wayne Biggs.
