Category: Connect Created on Thursday, 07 June 2012 06:56
Geothermal developer West Indies Power (WIP) is being sued by the Nevis administration, which is seeking to terminate its contract, and its investment partner Renova Capital Partners, to which it is indebted by nearly $1m, Recharge has discovered exclusively.
WIP, whose founder and chief executive, Kerry McDonald, cannot be contacted, has been promising the island of Nevis that it will build an approximately 10MW geothermal plant since it received a 25-year power-purchase agreement in 2007.
Despite several start dates, work has yet to begin on the ambitious project, the cost of which has gone from $30m to $70m since it was first announced.
WIP now is indebted to a number of creditors, according to the lawsuit filed by the Nevis Island Administration, NIA, which is asking that a contract with WIP for exploring and drilling for geothermal power signed in 2009 be terminated as the developer is unable to pay its debts.
In the meantime, the company’s investment partner, Renova Capital Partners, has filed suit in New York to recover loan money totalling $944,593 for construction of the geothermal plant.
The NIA, led by the Nevis Reformation Party (NRP), is being fingered for “getting into bed with a start-up company with no proven financial expertise or expertise in geothermal development,” says Mark Brantley of the opposition Concerned Citizens Movement (CCM).
Despite having a long-term PPA and setting its sights on a market beholden to high electricity prices because of a lack of indigenous fossil fuels, WIP has had trouble securing financing since the beginning.
At one point, the NIA authorized a guarantee of $55m to WIP for a loan from the Export-Import Bank of the United States for an 8.5MW project. That loan has never been approved. In addition, a mandate from Scotia Bank for $30m for a 10MW plant was signed but expired.
“We get these big bold statements being made all the time and we’re not sure at all whether these statements have any veracity because nothing has materialized,” Brantley tells Recharge. “West Indies Power is shrouded in mystery.”
As a result of the continually unfulfilled promises, “the public appetite for geothermal has waned,” says Brantley. “People now see it as pie in the sky.”
Nevis, which needs an installed capacity of about 13MW, has an expected 100MW of potential geothermal power, which it could send to its sister island St Kitts, which has a need for about 30MW of installed capacity.
“Conceptually, I think it’s a great idea” says Brantley, “but to make it happen, you need the financial expertise and experience” in geothermal development.
According to Brantley, Kerry McDonald has moved off the island, and indeed, his mobile phone number has been shut off and his and his press contact’s email addresses are defunct. Brantley adds that the local staff of WIP has also been terminated over the past two years: “The operation has basically ground to a complete halt.”
Picture credit to Treehugger
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