The Office of Utilities Regulations (OUR) yesterday gave energy firms more than one month’s extension to July 29 to submit final proposals for the 360-megawatt project.

The original date was June 17 for the companies vying for the project, including Armorview Holdings, Azurest-Cambridge, Energy World International Limited, the Jamaica Public Service Company and Optimal Energy.

The OUR is also extending the time frame to select the highest ranked entities from July 12 to August 29. The agency will subsequently finalise negotiation of the project agreements by November 21.

Construction of the plant is expected to begin January 20, 2014, while commissioning of the new capacity is set for two years later on January 2016.

The 360MW project, which is expected to introduce LNG to the fuel, is the primary means by which Government plans to slash energy costs by about one-third. In the process, it will replace old generating units, some of which were commissioned four decades ago.

business@gleanerjm.com

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Korea Electric Power Corporation (Kepco), which holds 40 per cent interest in the Jamaica Public Service Company (JPS) reported a 3.4 per cent increase in the book value of its investment in the utility to 303 billion won (US$267 million) in its March 2013 financials.

It indicates that JPS continues to provide value for its shareholders despite its March 2013 quarterly loss totalling some US$789,000, of which 40 per cent represented Kepco’s share of the loss.

Kepco is a subsidiary of Korea East-West Power.

The rise in the book value was caused by a 17-billion won (US$15-million) increase in ‘other comprehensive income‘ which represents certain gains not reflected in the profit and loss account. The financials posted to the US Securities and Exchange did not disclose the nature of the gains.

Kepco acquired JPS shares in 2011 for 301.9 billion won. Last financial year, the Korean company earned US$2 million in dividends from its JPS investment. The utility paid out a total of US$5 million in dividends last year.

For the three months ending March 2013, the company took no dividends, according to the financials.

The profitability of JPS, one of the largest companies in Jamaica, was affected by higher-than-usual finance costs at US$17 million for the quarter (US$11 million a year earlier) which nearly ate through the US$18 million of gross profit.

JPS’s other top owners are Japan’s Marubeni Corporation, at 40 per cent, and the Government of Jamaica, which holds 19.9 per cent.

The power utility currently earns US$1.14 billion (J$112b) of revenue annually as the monopoly distributor of electricity. It is capitalised at US$378.77 million (J$37.5b) while its net assets amount to US$838.46 million (J$83b).

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Phillip Paulwell - File
Phillip Paulwell – File

Damion Mitchell, Editor – Radio & Online

The Science, Technology, Energy & Mining Minister, Phillip Paulwell, is to meet with private sector stakeholders in Montego Bay this afternoon.

They are to explore investments opportunities within the industry.

There have been increasing calls for Jamaica to shift its reliance on oil to produce energy and instead pursue other sources like wind and solar.

Paulwell says he wants to facilitate the interest of potential investors in the energy sector.

The forum is scheduled to be held at the Montego Bay Convention Centre.

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Opposition spokesman on Industry, Commerce and Energy Gregory Mair is proposing that the administration make it mandatory for all government buildings to be fitted with solar photovoltaic systems.

“Every government building must have solar panels energising their lights, fans and other equipment. Not only will it bring savings in foreign exchange used by JPS to purchase fuel, but it will also reduce the electricity bills of Government and stimulate the growth of an industry of which Jamaica could become the Caribbean leader,” Mair pointed out during his contribution, last week, to the Sectoral Debate in Parliament.

He also wants the Government to introduce policy to make it compulsory for solar photovoltaic systems to be installed in government-related schemes.

“Let the Government drive demand in solar energy. If done properly, we could see an industry where we have solar photovoltaic panels and solar heating assembly plants exporting to the Caribbean and, by extension, the world,” he added.

Discussing how this project could become a reality, Mair said the Government should make the Petroleum Corporation of Jamaica (PCJ) more efficient.

“As we are aware, the PCJ is funded by the one per cent commission earned from the sale of fuel to Petrojam. The PCJ does not require all this funding and the majority of it should be dedicated to building this industry. It is a win-win all around,” Mair explained.

Turning to the PetroCaribe agreement, Mair argued that Jamaica could pay for fuel purchased under this accord with goods made locally, not only manufactured items but also produce.

According to Mair, Article IV of the PetroCaribe agreement states, among other things, that, “With regard to deferred payments, Venezuela shall be able to accept that the partial payments be done with products, goods and/or services, previously agreed by the parties, based on preferential rates proposed by the Government of Jamaica.”

He noted that Venezuela imported a lot of products and Jamaica had failed to take advantage of this clause of the PetroCaribe deal.

“Our Government should meet with our counterparts in Venezuela, like many other countries have, and agree on the goods we will be selling them in exchange for their fuel. Once this is done, Government should encourage the establishment and expansion of the industries that will capitalise on this arrangement,” the opposition spokesman stated.

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