KINGSTON, Jamaica
JPS president and CEO, Kelly Tomblin. – File
Monopoly power distributor, the Jamaica Public Service Company (JPS), has reported a two-thirds drop in its annual net profit to US$12.7 million (J$1.18b) following flat sales last year.
Kelly Tomblin, JPS president and CEO, all but blamed the losses on “reduced consumption, at least for paying customers”. She spoke at the Jamaica Chamber of Commerce forum on energy at the Knutsford Court Hotel in Kingston.
JPS revenues dipped by almost US$12 million to US$1.14 billion (J$106b) for the year, according to financials published on the Jamaica Stock Exchange.
Dividend payments to its Asian and Jamaican owners were slashed year-on-year resulting in a more than 200 per cent rise in cash to US$27.7 million for its year ending December 2012.
The power utility paid out US$5 million in ordinary dividends compared with US$44 million a year prior when net profit amounted to US$34.35 million.
The utility is owned by Japan’s Marubeni Corporation, 40 per cent; South-Korea-based Korea East-West Power (EWP), 40 per cent; Government of Jamaica, 19.9 per cent; while 3,000 shareholders own the remaining 0.1 per cent of the shares.
EWP became a shareholder in April 2011 when it acquired the 40 per cent stake previously held by Abu Dhabi-based TAQA.
The company recorded a slight increase in fuel costs which totalled US$777 million for the year ending December 2012, compared with US$765 million in the prior year. Such costs are usually passed on to customers.
Working capital also increased to US$147 million from US$139 million year-on-year.
Equity increased US$7.6 million to US$387 million year-on-year.
The cost of fuel, as well as old inefficient plants, has weighed on the company’s service delivery and its bottom line. JPS has presented Government with its own proposal to develop a new energy plant but has not disclosed the proposed fuel mix.
The OUR says it will respond to that proposal, as well as others from potential investors in renewables, in March.
business@gleanerjm.com
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Phillip Paulwell
Daraine Luton,
The Office of Utilities Regulation (OUR) has given the Jamaica Public Service Company (JPS) until March 15 to submit the details of an alternative proposal for supplying 360 megawatts of power to the national grid.
Earlier this month, the OUR had announced it had ended the request for proposal process with the JPS for the 360 megawatts power plant.
A day after missing the January 30 deadline to provide final details of how it would undertake the project, the JPS had made an alternative proposal to the OUR.
But in a release last night the OUR said the company
As you read this, Phillip Paulwell, Jamaica’s energy minister, is likely playing Mas in Trinidad at its annual carnival. Jamaicans may be minded to say that he is playing something else.
People here are also likely to conclude that the energy minister’s sojourn to Trinidad, and whatever he may be getting up to in Port-of-Spain, San Fernando, Arima, Diego Martin, or wherever, also says something about Mr Paulwell’s sense for priorities. That is a matter on which we would like to hear the view of Prime Minister Portia Simpson Miller.
First, though, we must make clear that this newspaper does not begrudge Mr Paulwell, or anyone else, his right to annual holidays. Nor would we normally care should any Jamaican decide to jet off to Port-of-Spain to join a carnival band, swig rum and dance up a storm at the Savannah. Which, of course, is not a claim we make of Mr Paulwell, not withstanding our unease at his absence from Jamaica at this time.
Here is the context. Jamaica faces not merely a crisis, but an energy emergency. Our sense, though, is that no one in the Government, including the portfolio minister, seems to grasp either the depth or the immediacy of the problem – at least not sufficiently for it to impinge on the bacchanal.
In Trinidad and Tobago, where the music of ‘Despas’, Destra, Machel and others may be echoing in Mr Paulwell’s head, firms pay around US$0.05 per kilowatt-hour for electricity. The Trinidadians have oil and gas and enjoy government subsidies on their power bill.
In energy-deficient Jamaica, we pay upwards of US$0.41 per kilowatt-hour for electricity, which is a significant input in production and a high price which helps to make Jamaican firms uncompetitive. Indeed, over the past decade and a half, several plants that built things in Jamaica have migrated in favour of Trinidad, with which we run a trade deficit of nearly US$1 billion.
ENERGY WAFFLE
For more than a decade, Jamaican administrations have waffled and procrastinated over an energy policy to deliver cheaper electricity prices. Recently, under Mr Paulwell’s watch, there has been the final slow-motion collapse of a project that was to make liquefied natural gas (LNG) as the fuel of choice and to deliver electricity at between a 33 and 40 per cent below current prices.
Last week, for instance, the Office of Utilities Regulation (OUR) rescinded the Jamaica Public Service Company’s (JPS) position as the preferred bidder on a 360-megawatt, gas-fired power plant because the light and power company missed deadlines to demonstrate that it could meet the benchmark price. The problem is that JPS, having assumed the effort to source the fuel after the Government backed out, has been unable to find LNG cheap enough for the project to make sense at the target price.
Minister Paulwell claimed to have been blindsided by the OUR actions, suggesting that he was in favour of giving JPS additional time, without the continued financial burden of a performance bond, to rescue the deal. The upshot has been a state of confusion, in the Government and elsewhere, over energy. The situation is in need of a steady and steadying hand.
In the midst of this situation, Mr Paulwell chose carnival – the kind of stuff that would make Les Green‘s day.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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Petrojam
Jamaica Public Service Company headquarters on Knutsford Boulevard in New Kingston. – File
The Office of Utilities Regulation has formally cancelled its agreement with JPS for development the 360 MW liquid natural gas plant, but the power company said Tuesday that the decision does not mean an end to the energy project.
Jamaica Public Service Company presented a modified version of the development to the OUR last Thursday, but would not say whether that plan still banks primarily on LNG for the plant ahead of feedback from the regulator on its proposal.
Company spokeswoman Winsome Callum told
Phillip Paulwell
Arthur Hall,
We are sick and tired of Mr Phillip Paulwell’s approach to energy policy formulation that appears to us to be an amalgam of stalking horses, three-card tricksters, and loquacious bravado.
So, it is time for the minister to end the drawing room charade and come clean with the Jamaican people. There is far too much at stake for anything less.
We here refer to what, at a glance, seems to be a public difference between the energy and mining minister and Mr Zia Mian, the outgoing head of the Office of Utilities Regulation (OUR), over whether the agreement for the Jamaica Public Service Company (JPS), the light and power provider, to build a 360-megawatt power plant will be, is, or has been rescinded.
Ask us: It’s all a contrivance. It has been an open secret for weeks, especially in circles where energy matters are discussed, that JPS’s successful bid for the plant would be abrogated and another route sought. The deed, the OUR has now reported, is done. Prior to that, the issue was how to announce a policy lurch on energy to the public and how breaking the contract would be achieved without inviting lawsuits from JPS.
The background to this matter is – Minister Paulwell’s obfuscatory palliative notwithstanding – on Jamaica’s energy crisis. We described the energy situation as such because at more than US$0.41 per kilowatt-hour, the cost of electricity in Jamaica is not only high, but destabilising to the economy. It helps to make our firms uncompetitive in the global market.
Indeed, it was this problem that the new JPS plant, to be fired by natural gas, was aimed at curing. Gas is cheaper than the expensive oil that now accounts for more than 90 per cent of Jamaica’s energy.
At the time of the bidding, during the former administration, after more than a circumlocutory discourse on the energy question, the Government undertook to source liquefied natural gas (LNG) for the facility. The problem is that it could not find LNG at a price that allowed for a one-third drop in electricity prices.
The administration backed out of the undertaking to procure the fuel and gave the task to JPS. It was soon apparent that JPS was not having any better luck. In the meantime, Mr Paulwell was floating new, untried gas transportation/delivery technology to achieve this end. His effort seems to have failed.
FORK IN THE ROAD
All this seems to have played into Mr Paulwell’s preference of coal as Jamaica’s best, and most economic, fuel option. It was Mr Mian’s preferred option, too, nearly a decade and a half ago when he first advised Jamaica on energy. Later, in line with government policy, he worked on the LNG option, but says that Jamaica missed the window. Mr Mian now says that the OUR will retender the power plant, but this time with an open fuel option.
Mr Paulwell, in ‘responding’ to Mr Mian’s comments, says that while “we have been in discussions with the OUR”, there was as yet no formal submission to take to the Cabinet. He knows, too, that JPS has made “a revised submission” on the plant. What that entails, we were not told.
These statements were being made only hours before the OUR’s formal declaration that it had pulled the plugged on JPS.
So, after a zigzag run, the energy question slowed at another fork in the road. What we need is some damn honesty on the matter. We won’t tolerate hazy backroom dealing on this.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
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