Camilo Thame, Business Reporter

CMS Energy, the Michigan-based company, whose 42 per cent is the single largest block of shares in Jamaica Private Power Company (JPPC), has put up its stake for sale, the company has reported.

A week ago, CMS told the U.S. Securities and Exchange Commission that it had entered into a "binding letter of intent" with another Michigan-based firm, Lucid Energy, to sell a "portfolio of its business in Argentina and its northern Michigan non-utility natural gas assets for US$180 million."

The company at the same time disclosed its intention to offload its Jamaica plant as well as other assets in South America - a move that would bring CMS close to full withdrawal from the international energy market.

"We just started the process and we have yet to decide what sorts of bids we will accept - on individual assets or grouped," CMS spokesman Jeff Holyfield told Wednesday Business about the Jamaican divestment. "We expect the sale to be completed by the end of the year."

This decision follows last year's announcement by Atlanta-based Mirant Corporation of its plan to sell its 80 per cent stake in Jamaica Public Service (JPS), the light and power company to which JPPC sells its output.

PARTNERSHIP

JPPC, a Rockfort, Kingston-based plant, is a partnership between CMS, Atlantic Power Corporation (24.1 per cent), Energy Investors Fund and Commonwealth Development Corporation. The facility, which began operating in 1998, provides 63 megawatts of electricity to the 817-MW national power grid, using low-speed diesel-fired generators.

The four investors put up 30 per cent of the US$144 million project cost in equity and financed the rest through debt, at a time when U.S. energy companies were seeking markets outside of North America to maximise returns from a sector that was expanding rapidly worldwide. The upshot, however, has huge debt portfolios and lower-than-expected returns, helping to drive firms like CMS out of international markets.

"Since 2002, our firm has been divesting its international assets, and has sold a number of assets in the U.S. as well," Holyfield said. "We need to get our financial house back in order."

By that, Holyfield means that CMS intends to cut its debt, already halved to US$2.8 billion between 2002 and 2006, by another US$1.5 billion.

ASSETS

For 2007, The U.S firm has already found buyers for over US$1 billion of its international assets, which includes the sale of its interest in the Middle East and Asia to the Abu Dhabi National Energy Company (TAQA) for U$900 million. That transaction should be completed by mid-year.

After this year's sales and auctions, CMS will only be left with TGN natural gas business in Argentina and a generating plant in Venezuela as its foreign assets. However, the future of the Venezuelan operation is likely to be determined by the action of President Hugo Chávez, who has been talking nationalisation in his country.

camilo.thame@gleanerjm.com