Energy Minister Phillip Paulwell (standing) and Joan Spencer-Ernandez, Board Chair of the Caribbean Maritime Institute (CMI), bear witness as CMI Executive Director Fritz Pinnock and Jamaica Public Service Company Chief Executive Officer Kelly Tomblin sign an agreement to retrofit existing street lights with light-emitting diode (LED) units. The manufacturing and assembly of the lights are to be done locally by engineers and technicians at the CMI.
The Office of Utilities Regulation (OUR) must quickly decide whether it is up to the job it is mandated to perform. If it is not, it must move over and let someone else get on with it.
We especially refer to the agency’s ability to determine Jamaica’s future energy needs, the fuel mix that will meet those requirements at the cheapest cost, and to evaluate bids that will deliver power most economically.
To be frank, this newspaper is not now sanguine of the OUR’s capacity to deliver. Nor are we any more convinced that the Government is appropriately seized of the importance of the urgency with which the matter needs to be resolved.
Or, maybe it is that our people are playing games, or have motives understood only by themselves. For when seemingly rational people engage in irrational behaviour, it is cause to wonder.
There, long ago, appeared to have been consensus on the energy question: that the cost of electricity, at around US$0.42 per kilowatt-hour, makes Jamaican businesses uncompetitive and is a major drag on the country’s economy. So, a substantial lowering of the cost of power, it was agreed, or so we thought, was a national priority.
NATURAL GAS AND HOT AIR
The issue was what would constitute a reasonable lowering of the price of energy, and how this was to be achieved. After more than a decade of haggling and procrastination, it was finally agreed, as official policy, that natural gas would be the fuel of choice.
In 2010, a 480-megawatt gas-fired plant, with appropriate facilities for the storage and regasification of liquefied natural gas (LNG), was put to tender. But that arrangement was abandoned when it was determined that the bidding process may have been affected by conflicts of interest and/or inappropriate behaviour.
Towards the end of 2011, the Jamaica Public Service Company (JPS), which has a monopoly on the transmission and distribution of electricity, was the sole bidder and selectee to build and operate a 360-megawatt plant. But by February this year, the OUR was withdrawing from the arrangement during differences over bond payments and the inability of JPS to source LNG at price points the regulator felt were tolerable.
PROPOSAL EXTENSIONS
In early February, the OUR announced it would accept unsolicited proposals for the power plant.
Five entities filed bids, comprising 14 proposals. The OUR shortlisted three companies, and a final recommendation to the Government should have been done by April 15. But before that time, the process was reopened to allow the consideration of a bid to the Government by a latecomer.
Since then, there have been two extensions to accommodate changes by the OUR to the instructions to the bidding entities. So, instead of completing an evaluation of the bids by August 28, the OUR now says that will happen by September 9.
Overall, the projection for completing negotiations with the successful bidder, by the OUR’s estimate, will be delayed by only a few weeks, thus allowing the construction of the facility to begin in early 2014. This newspaper, however, is not convinced.
At the very least, the entire process has been messy, overlaid by a whiff of amateurism – or worse.
Energy is too crucial to the economy for such sloppy management. Perhaps there is more that people should know than meets the eye.
Three of the island’s major private sector organisations are again expressing disappointment at the recent decision by the Office of Utilities Regulation (OUR) to further delay the bid process for the 360 Megawatt Generating Project.
The organisations have also expressed alarm at the decision by the OUR to also remove the requirement for an up-front bid bond to be posted at the same time as submission of the bid.
In a joint news release yesterday, the Jamaica Chamber of Commerce (JCC), Jamaica Manufacturers’ Association (JMA) and the Private Sector Organisation of Jamaica (PSOJ), said that they were alarmed at these latest developments, which have come just two working days before the previous July 29 deadline.
According to the organisations, “the bid bond serves the critical purpose of mitigating against (i) the presentation of frivolous, unrealistic, initially-low bids that upon award require further negotiation with the OUR, and/or (ii) the presentation of apparently attractive bids, devoid of substance, that lack the appropriate due diligence and serious consideration, on the part of the sponsor and investors, that would only come after award.
“A removal of the bid bond requirement with bid submission is therefore an invitation for mischievous bid behaviour, delays and false promises. In fact for a project of this size, any bidder that is reluctant to provide a substantial bid bond must be viewed with some skepticism,” the statement said.
The private sector organisations said that they are cautioning the Government against fostering an environment that incentivises these kinds of strategies in such an important project that is needed urgently for the country’s economic growth.
According to the groups, the up-front provision of a substantial bid bond is a normal procedure in major infrastructural bids in Jamaica and worldwide, and this current move does not follow best practices, adding that while they reluctantly accept that the delay seems to be a foregone conclusion, they are strongly urging that the bid bond requirement be reinstated immediately, in order to ensure that transparency and credibility is maintained throughout this process.
Three of the island’s major private sector organisations are again expressing disappointment at the recent decision by the Office of Utilities Regulation (OUR) to further delay the bid process for the 360 Megawatt Generating Project.
The organisations have also expressed alarm at the decision by the OUR to also remove the requirement for an up-front bid bond to be posted at the same time as submission of the bid.
In a joint news release yesterday, the Jamaica Chamber of Commerce (JCC), Jamaica Manufacturers’ Association (JMA) and the Private Sector Organisation of Jamaica (PSOJ), said that they were alarmed at these latest developments, which have come just two working days before the previous July 29 deadline.
According to the organisations, “the bid bond serves the critical purpose of mitigating against (i) the presentation of frivolous, unrealistic, initially-low bids that upon award require further negotiation with the OUR, and/or (ii) the presentation of apparently attractive bids, devoid of substance, that lack the appropriate due diligence and serious consideration, on the part of the sponsor and investors, that would only come after award.
“A removal of the bid bond requirement with bid submission is therefore an invitation for mischievous bid behaviour, delays and false promises. In fact for a project of this size, any bidder that is reluctant to provide a substantial bid bond must be viewed with some skepticism,” the statement said.
The private sector organisations said that they are cautioning the Government against fostering an environment that incentivises these kinds of strategies in such an important project that is needed urgently for the country’s economic growth.
According to the groups, the up-front provision of a substantial bid bond is a normal procedure in major infrastructural bids in Jamaica and worldwide, and this current move does not follow best practices, adding that while they reluctantly accept that the delay seems to be a foregone conclusion, they are strongly urging that the bid bond requirement be reinstated immediately, in order to ensure that transparency and credibility is maintained throughout this process.
General Manager for Loan Origination and Portfolio Management at the Development Bank of Jamaica (DBJ), Edison Galbraith (left), in conversation with Managing Director at FosRich Company, Cecil Foster, at a recent energy forum, held at the Montego Bay Convention Centre, in St. James.
The Development Bank of Jamaica (DBJ) is offering a special energy efficiency loan at eight per cent, for business operators to cut costs and advance the country
Energy efficiency is defined as using less energy to provide the same level of energy service. Some examples of energy efficiency are better insulation of buildings, using energy saving light bulbs, buying cars with better gas mileage. Energy efficiency is achieved primarily by means of a more efficient technology or processes rather than by radical changes in individual behavior.
Energy Star is an international standard for energy efficient consumer products. It was first created as a United States government program in 1992, but Australia, Canada, Japan, New Zealand, Taiwan and the European Union have also adopted the program. Devices carrying the Energy Star logo generally use 20%