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SINCE its inception in 2014, the Caribbean Climate Innovation Centre (CCIC) programme has been leading the way in developing a regionally integrated approach to solving the Caribbean’s climate, energy, and resource challenges.

The CCIC programme aims to assist Caribbean island states to adapt to and mitigate the impact of climate change by empowering each territory to create clean technologies and businesses, and strengthening several critical areas.

Chief Executive Officer (CEO) Everton Hanson says that the centre is taking an entrepreneurship approach to addressing the issues.

“The purpose of this project is to build an entrepreneurial ecosystem that will foster growth-oriented entrepreneurs and profitable businesses that address climate change mitigation and adaptation,” he explains.

The CCIC, which was established as a Consortium, is jointly managed by two of the Caribbean’s foremost scientific institutions — the Scientific Research Council (SRC), based in Jamaica, and the Caribbean Industrial Research Institute (CARIRI) situated in Trinidad and Tobago.

Both islands have active CCIC programmes and function as the project’s primary ‘country hubs’. These hubs are responsible for administering financing, management, and support service delivery regionally.

Locally, the CCIC project is housed at the offices of the SRC located at Hope Gardens in Kingston.

The programme, which emphasises the need for a unified response to developing climate change solutions, has 12 established country hubs in several other Caribbean Community (Caricom) states: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, and Suriname.

The CCIC model was developed in collaboration with local stakeholders and addresses the gaps across five priority areas: solar energy, water management, sustainable agribusiness, resource use and efficiency, and energy efficiency.

The CCIC also offers services that assist entrepreneurs in developing business models for their products and services. Among these are technology commercialisation; market development; mentoring and training; networking, as well as business incubation support, and identifying and developing local, regional and international market opportunities.

A key feature of the programme is that it facilitates the testing and prototyping of proposed innovations, and provides technical support and information on contemporary green technology.

So far the bold initiative has met with success, instituting innovative activities in its goal of supporting companies from the nascent stage to an advanced stage of development. This has been accomplished through the staging of boot camps and accelerator programmes, among other activities.

One of its more notable programmes, the Proof of Concept (PoC) competition held in 2015, invites innovators to present designs and concepts for products which can be transformed into viable businesses.

Over 300 innovators from 13 Caribbean countries applied for grant funding through the competition, with 11 winners selected from the pool of applicants.

The successful participants, who were awarded grants ranging from US$10,000 to $50,000, came from Jamaica, Antigua and Barbuda, St Kitts and Nevis, Dominica, St Lucia, and Belize.

Additionally, the PoC winners benefited from several capacity-building exercises facilitated by CCIC and CARIRI, including mentorship, training and technical assistance in business incubator activities.

The CCIC in Jamaica recently hosted the Caribbean Green Tech Start up Boot Camp, which ran from February 26 to 28. Over 70 innovators and entrepreneurs from across the Caribbean participated in the interactive three-day workshop, which challenged them to refine their concepts, transforming them into viable, sustainable businesses.

Executive Director of the SRC, Dr Cliff Riley, points out that with the project is an important initiative as it directly addresses problems associated with climate change while stimulating economic development.

“It is a project for the entire region to build capacity and to ensure that innovative ideas and products can be translated into viable businesses,” he notes.

The programme was developed under the World Bank’s global partnership development programme, InfoDev, and is being implemented under its Climate Technology Programme.

The Caribbean component of the Climate Innovation Centre (CIC) is one of seven CICs established across the world. Other countries with CICs are Kenya, Ethiopia, South Africa, Vietnam, Morocco, and Ghana.

The CCIP programme is one of three components of the World Bank/InfoDev Entrepreneurship Programme for Innovation in the Caribbean and is funded by the Canadian International Development Agency.

Jamaica Observer

 McCaulay … It appears the environment will be under the Office of the Prime Minister along with a lot of different, other important national areas and I fear the environment focus will be lost in the other priorities.

Prime Minister Andrew Holness has attracted the attention of environmentalists with the exclusion of the environment and climate change portfolio as a named ministry in his Cabinet.

For environmentalists, it does not send a positive signal.

“I am disappointed to see that there is no environment ministry and no environment minister. It appears the environment will be under the Office of the Prime Minister along with a lot of different, other important national areas and I fear the environment focus will be lost in the other priorities,” said Diana McCaulay, Chief Executive Officer of the Jamaica Environment Trust (JET).

“I don’t think this first signal is a very positive one. It used to be that the environment portfolio moved around from ministry to ministry. Now it would it seem to have disappeared entirely,” she added.

Only last week, JET, along with a number of other entities, including the Windsor Research Centre, urged the new Prime Minister to give priority to a host of environment issues, notably:

*climate Change
*Cockpit Country
*planning for sustainable development
*protected areas
*sanitation and public health
*enforcement of environmental laws

With the Jamaica Labour Party vowing in its manifesto to work with environment actors, McCaulay said she was eager to learn how the realities of the new Cabinet will gel with the identified priority areas.

“I would like to hear the details of how this would work sooner rather than later and I would like to hear a timeframe for doing some of the things stated in the manifesto,” she told The Gleaner.

Head of the South Trelawny Environment Agency Hugh Dixon was in agreement.

“I think with growth and prosperity being the sort of thrust of the new government, it seems to be an awful oversight as the issues that are at the forefront of development are predicated to a great extent on an awareness and sensitivity to [for example] climate change,” he said.

According to Dixon, the situation is will challenge civil society environment groups to gain traction in terms of the significance and value of climate change, and the environment.

“I would, with caution, say that I hope that wherever it has been dispensed to, it holds some order of priority consistent with its current standing globally and any sort of growth and development agenda,” he added.

Former Minister of Local Government and Community Development, and one-time Opposition spokesman on Environment Noel Arscott has himself questioned the rationale behind the lack of a designated ministry of environment and/or climate change.

“Jamaica and the Caribbean fall in one of the most vulnerable regions in the world affected by the vagaries of the weather. We certainly are victims of any kind of climate change impacts… So for a government not to put that on the front burner was really shortsighted…” he said.

The Gleaner

The JPS power station at Bogue, Montego Bay, which is being converted to run on LNG.

New Fortress Energy, the company seeking to supply liquefied natural gas (LNG) to Jamaica, has secured a two-year contract for an LNG vessel and is to start shipping gas this month.

Golar LNG Limited, a Bermuda-registered company which operates the vessel Golar Artic, revealed the contract details to its investors.

“Golar has now concluded a two-year charter agreement with New Fortress Energy Transport Partners LLC (NFE) for the employment of Golar Arctic in Jamaica,” said Golar its statements obtained by the Financial Gleaner.

New Fortress has an agreement with Jamaica Public Service Company (JPS) to supply gas to its 120MW power plant at Bogue in Montego Bay, a contract New Fortress will service via gas infrastructure under development at the Montego Bay port. JPS has been mum on the price at which the gas will be supplied to Bogue.

The American company is also expected to develop gas infrastructure and supply JPS’ Old Harbour plant with LNG once it is built, but those negotiations continue.

Bogue is currently being converted to run on gas as well as diesel oil, the fuel on which it was originally commissioned in 2003. General Electric is doing the retrofitting under a US$22.74-million contract from JPS. Bogue will become a combined-cycle plant, capable of switching between gas and diesel.

New Fortress Energy assumes the costs for delivering gas to the burner tip. JPS has no stake in the gas infrastructure project.

New Fortress’ ambition Golar said the deal it has with New Fortress solves a long-standing problem regarding the cost of regasification, and that it fits with New Fortress’ ambition to become a regional supplier of LNG to Caribbean countries.

“Jamaica has long sought to replace liquid fuels with LNG, however, the size of the market has always made it difficult to justify the cost of a conventional floating storage and regasification unit,” said the fuel shipping company.

“New Fortress have now solved this challenge by utilising ship-to-ship transfer of LNG from Golar Arctic on to smaller LNG carriers to service a number of locations within the country of Jamaica.”

Golar Arctic is scheduled to load the first LNG cargo in support of this new business “during March 2016”. Golar and New Fortress believe this new approach to delivering LNG to niche markets has wide application within the Caribbean and other similar markets around the world, stated Golar.

“New Fortress have, with their entrepreneurial approach to business development, shown that downstream LNG markets can be developed within a much shorter time frame than is customary. Similar fast-track solutions will be essential if consumers are to benefit from the large incremental volumes of LNG that will be delivered to market over the next three-four years,” stated Golar.

The Financial Gleaner sought a project update from both JPS and New Fortress, but none came up to press time.

Golar LNG this week reported a fourth-quarter adjusted operating loss of US$35.9 million.

The Gleaner

Jamaica is to reduce greenhouse gas emissions by the equivalent of 1.1 million metric tons of carbon dioxide per year by 2030 as part of its global commitment to take climate change mitigation action.

To bring this about, the island – as reflected in its nine-page Intended Nationally Determined Contributions (INDCs) document to the United Nations Framework Convention on Climate Change – has undertaken to implement energy policies that ensure that the island uses energy wisely and aggressively to pursue opportunities for conservation and efficiency has a modernised and expanded energy infrastructure that enhances energy-generation capacity and ensures that energy supplies are safely, reliably, and affordably transported to homes, communities, and the productive sectors on a sustainable basis, and achieves its energy resource potential through the development of renewable energy sources by increasing their share in its primary energy mix of 20 per cent by 2030.

Such policies are also to ensure that government agencies and ministries are models and leaders in energy conservation and environmental stewardship and that the island has a well-defined and established governance, institutional, legal, and regulatory framework.

Private Industry Support

Fully implemented energy polices need, too, to ensure that private industry embraces “efficiency and ecological stewardship to advance international competitiveness and to move towards a green economy”, the document said.

Realising Nationally Determined Contributions is essential if the target of the climate deal, brokered in Paris in December, is to be reached.

That agreement – to which Jamaica is a party – looks to hold “the increase in the global average temperatures to well below two degrees above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels”.

New Activities

It is against this background that Jamaica is continuing its own mitigation efforts.

“Certain new activities have started up again under the memorandum of understanding we had with the Americans, for example, particularly around natural gas, that will allow us to have much more efficient plants …” a source from the Ministry of Water, Land, Environment, and Climate Change told The Gleaner at the start of the year.

“Natural gas generation, generally speaking, can be made to respond very well to changes in demand … . For example, if you have a solar plant and production dips, it is relatively easy for you to ramp up the production of electricity from a natural gas plant,” the source added.

There are also other efforts afoot.

“Recognising that energy is not just electricity, it is also transport, some of the work we will be doing in respect of sector planning will involve a closer look at transportation and transportation efficiency and how we can reduce the amount of oil consumed there,” the source noted.

Further, to achieve 20 per cent renewables in the island’s energy mix, the source said, “You can increase the amount of renewables or decrease the amount of other fuels in the mix. There, you are talking efficiency measures and the Government is looking at efficiency in a number of respects.”

The Gleaner

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RIYADH, Saudi Arabia (AFP) — The Nigerian and Saudi leaders yesterday supported efforts to stabilise the oil market but Africa’s top producer did not commit to a production freeze.

After talks in the Saudi capital Riyadh, Nigeria’s President Muhammadu Buhari and Saudi King Salman “committed themselves to doing all that is possible to stabilise the market and rebound the oil price,” Buhari’s office said in a statement.

Buhari was in Riyadh a week after Saudi Arabia, Russia, Venezuela and Qatar agreed at talks in Doha to freeze production at January levels in a bid to stem the dramatic fall in oil prices.

The agreement is conditional on other major producers joining in, as oil heavyweights seek to ensure others not to take advantage of output limits to win market share.

The statement after yesterday’s talks made no mention of Nigeria joining the freeze but analysts say the OPEC member is likely to eventually support the move.

The official

Saudi Press Agency also reported that talks between Prince Abdulaziz bin Salman, the Saudi deputy oil minister, and his Nigerian counterpart, junior oil minister Emmanuel Ibe Kachikwu, focused on “the best way for (market) stability” and “the cooperation of producing countries inside and outside OPEC” to achieve this.

Saudi Arabia and its gulf allies in the Organisation of Petroleum Exporting Countries had been refusing to limit or reduce production, leading to a supply glut that has seen prices fall by 70 per cent since mid-2014.

Poorer OPEC members, including Nigeria, have been hard hit by the price drop but even the wealthy Gulf states have been forced to adopt austerity measures to cope with falling oil revenues.

“I wouldn’t be surprised to see them voice their support to the freeze agreed in Doha,” Abhishek Deshpande, lead oil market analyst at Natixis in London, said of Nigeria.

But he said that unless Iraq and Iran also commit to limit production such talks “carry very little weight”.

The two countries are OPEC’s second- and third-largest producers.

Iran, returning to world markets as sanctions are lifted under its nuclear deal, has insisted on boosting production to pre-sanctions levels.

“Some neighbouring countries have increased their production over the years to 10 million barrels per day and export this amount, then say let’s all freeze our oil production,” Oil Minister Bijan Zanganeh said yesterday.

“They freeze production at 10 million bpd and we freeze at 1 million bpd. This is a very funny joke.”

Saxo Bank analyst Christopher Dembik told

AFP that Nigeria’s position is “a bit ambiguous,” supporting the mooted freeze but at the same time wanting to increase its production to respond to domestic market needs.

Nigeria could be crucial

“In the longer term, there is no reason why the country won’t align itself with the position of Saudi Arabia and Russia,” Dembik said.

Nigeria and Saudi Arabia would also discuss their position towards Iran and Iraq, he added.

“Nigeria could have a crucial role in this respect because of its measured position” that Iran and Iraq should elevate their production before envisaging freezes, Dembik said.

“It is probable, then, that Nigeria meanwhile establishes a bridge for negotiations, notably between Riyadh and Tehran.”

According to OPEC’s Monthly Oil Market Report, Iraq produces about 4.4 million barrels a day, followed by Iran at more than 2.9 million.

Saudi Arabia’s output is close to 10.1 million barrels a day, according to January data.

Kachikwu, who is head of Nigeria’s state-run oil firm, also discussed joint oil and gas investments during his meeting with Abdulaziz, SPA reported.

Oil prices nudged higher Tuesday as the two OPEC members met.

US benchmark West Texas Intermediate crude for delivery in April was up one cent at US$33.40 a barrel. Brent North Sea crude for April rose 18 cents to US$34.87 compared with Monday’s close.

After the Saudi visit, the Nigerian delegation was to travel to Qatar for more oil talks.

Jamaica Observer

Jamaica is, in the coming months, to assess the global climate deal brokered in Paris last December, before putting its final seal on it.

The first order of business, according to Colonel Oral Khan, chief technical director in the Ministry of Water, Land, Environment, and Climate Change, is to educate stakeholders.

“We are at the stage now of sensitising everybody, and some internal sensitisation has taken place. We have [also] been in the media and will be rolling it out to the public as well, so they get to understand what the agreement is about – what obligations it places on us and on other countries,” he told The Gleaner.

Thereafter, Khan said, “We will be taking steps, as soon as Cabinet gives direction, to ensure we can sign on to the agreement when it opens up later this year.”

A part of that ratification process will be a full assessment of the deal, which is currently captured in a 32-page document.

“There is a whole process of review [that will have to be done]. The attorney general [for example] will need to read the document to see what the Government will be bound by, to ensure that those things are things we want to be bound by, and also [to look at] the implications,” he noted.

Albert Daley, head of the Climate Change Division, attested to the work ahead, while emphasising the need to have the document thoroughly assessed.

“For this agreement, all the factors that affect any one area are not found in any one section. For example, there is one section that deals with mitigation and the general issues surrounding mitigation will be reflected there. But there is also a section on finance, and there is a link between mitigation and finance,” he explained.

“So one has to look through the entire document to understand what each section is saying about the other and to get an overall sense of what are the implications of the agreement in the various areas,” Daley added.

As such, in addition to a post-Paris meeting to be held towards the end of this month, he said the plan is to engage one-on-one with groups of actors.

The Gleaner

 

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The Jamaica Public Service Company (JPS) says it is unable to definitively state how the use of both automotive diesel oil and liquefied natural gas (LNG) at the Bogue power plant in St James will impact the price of electricity to consumers.

It said the power plant currently burns on automotive diesel oil “and we are doing a conversion that adds the capability to also burn natural gas. So we will end up with the ability to burn both fuels at no extra cost”.

Responding to Wednesday Business queries about the rationale for the dual-fuel facility, the JPS said natural gas will be the primary fuel on which the plant operates and automotive diesel oil will be a back-up fuel “in case we have any problems with receiving natural gas”.

It added that under normal conditions, the plant will effectively be a gas-fired power plant.

IMPACTON ELECTRICITY PRICES

As to how it will impact the price of electricity the JPS said in emailed responses that “we cannot speak to the likely impact on electricity prices given the uncertainty of prices in the future (for oil vs LNG)”.

However, it said that the impact is expected to be negligible given that Bogue only represents approximately 10 per cent of the company’s total costs.

“What we can say with fairly good certainty is that the cost of electricity today is 30 per cent lower than it was one year ago, and we expect that trend to continue throughout 2016, given that 80 per cent of our net generation (production) will still be based on oil, 10 per cent will be from natural gas, and we expect renewables to make up 10 per cent of our net generation once the three renewable energy projects currently under construction (for circa 80 megwatts) are completed before the end of 2016.”

The JPS, an integrated electric utility company and the sole distributor of electricity in Jamaica, added that “that means we continue doing a good job as a country of increasing the penetration of renewable, while also diversifying our fuel mix and reducing our overexposure to oil”.

It said that it is hoping to continue doing more of that through the 37 megawatts of renewables currently being pursued by the Office of Utilities Regulation through a request for proposal, as well as its 190 megawatt gas-fired power plant that will be commissioned in mid-2018.

IMPROVING COMPETITIVENESS

Reducing the cost of electricity is critical to improve competitiveness, according to the International Monetary Fund’s latest updated memorandum of economic and financial policies.

It said that the action plan prepared by the Electricity Sector Enterprise Team foresees replacing current oil-fired generation capacity with gas, coal and ethane-fired plants to achieve significant cost savings.

Next steps will include the conversion of the Bogue power station from oil to gas, a process which the JPS is currently undertaking.

In addition, said the memorandum, the Government has approved the construction of Jamaica’s first natural gas-fired power plant, a 190-megawatt facility to be built and operated by JPS, and to be completed by 2018. Several renewable energy projects are also under way.

The Government said it will prepare a plan to ensure that all public entities – central government, local government and public bodies – meet their financial obligations in a timely manner.

In the memorandum, the Government also pointed out that urgent actions will be taken to reduce the time needed for entrepreneurs to get an electricity connection. Plans foresee the automation of the work processes within the government electrical regulator and the acquisition of an Application Management and Data Automation (AMANDA) software to streamline procedures for scheduling, inspecting, approving and certifying electrical installations.

An action plan for implementation of the reforms and adoption of the AMANDA system are expected to be completed in fiscal year 2016/17, with support from the Inter-American Development Bank.

The Gleaner

Warmer and wetter conditions facilitate transmission of mosquito-borne diseases, which may have added to spread, says lead climate change scientist

 

Zika virus Central South America climate change

Tamires da Costa, 16, who is four months pregnant, stands in a street with standing flood water next to her home in the Parque Sao Bento shantytown of Rio de Janeiro, Brazil on 29 January 2016. Photograph: Leo Correa/AP

The outbreak of Zika virus in Central and South America is of immediate concern to pregnant women in the region, but for some experts the situation is a glimpse of the sort of public health threats that will unfold due to climate change.

“Zika is the kind of thing we’ve been ranting about for 20 years,” said Daniel Brooks, a biologist at University of Nebraska-Lincoln. “We should’ve anticipated it. Whenever the planet has faced a major climate change event, man-made or not, species have moved around and their pathogens have come into contact with species with no resistance.”

It’s still not clear what role rising temperatures and altered rainfall patterns have had on the spread of Zika, which is mainly spread by mosquitos; the increased global movement of people is probably as great an influence as climate change for the spread of infectious diseases. But the World Health Organization, whichdeclared a public health emergency over the birth defects linked to Zika, is clear that changes in climate mean a redrawn landscape for vector and water-borne diseases.

According to WHO, a global temperature rise of 2-3C will increase the number of people at risk of malaria by around 3-5%, which equates to several hundred million. In areas where malaria is already endemic, the seasonal duration of malaria is likely to lengthen. Aedes aegypti, the mosquito that carries Zika and other diseases, is expected to thrive in warmer conditions.

As climate change reaches almost every corner of the Earth’s ecology, different diseases could be unleashed. Increased precipitation will create more pools of standing water for mosquitos, risking malaria and rift valley fever. Deforestation and agricultural intensification also heightens malaria risk while ocean warming, driven by the vast amounts of heat being sucked up by the oceans, can cause toxic algal blooms that can lead to infections in humans.

“We know that warmer and wetter conditions facilitate the transmission of mosquito-borne diseases so it’s plausible that climate conditions have added the spread of Zika,” said Dr Diarmid Campbell-Lendrum, a lead scientist on climate change at WHO.

“Infectious agents in water will proliferate with more flooding. It’s clear that we need to strengthen our surveillance and response to a range of diseases. Globalization, the movement of people, is an important factor too. In a world where we are disrupting the climate system we’ll have to pay the price for that.”

WHO estimates that an additional 250,000 people will die due to climate change impacts – ranging from heat stress to disease – by 2050, but Campbell-Lendrum said this is a “conservative estimate”.

“It is based on optimistic assumptions that the world will get richer and we’ll get better at treating these diseases,” he said. “We do need to get better at controlling diseases at their source and we do need to drive down greenhouse gases because there is a limit to our adaption. By moving to cleaner energy sources we will also help relieve one of the largest health burdens we have, which is the air pollution that kills seven million people a year.”

Until now, efforts to push back the threat of infectious diseases has been successful. Malaria, for example, used to be found in the New York area – and there is evidence to suggest it was once present in southern England; much earlier, the Romans used to retreat to the hills at certain times of the year to avoid mosquitos carrying the disease. Vaccines have been developed for a range of diseases including, belatedly, Ebola.

The eradication of threats like these makes wealthy western countries fret over outbreaks like Zika. As the world warms, there may be a lack of preparation for other diseases not currently considered threats.

“This is likely to become an equal opportunity crisis,” said Brooks. “The developing, poorer countries are impacted disproportionately but they deal with these diseases all the time, they are not surprised by them. But in Europe and North America, people have lived in a bubble where we think our wealth and technology can protect us from climate change. And that’s not true.

“The thing that worries me most is a death by a thousand cuts. I don’t think an Andromeda strain will wipe out all humans. But the amount of time, money and effort needed to combat these many different problems can overwhelm a healthcare system.”

So which climate-fueled diseases are likely to pop up next? Some experts believe that water-borne diseases could escalate, which would have significant consequences for countries such as Bangladesh – a low-lying nation with plenty of rivers that has a public health system already struggling to meet its population’s current needs.

“There’s not nearly enough attention paid to diseases that cause diarrhea, crypto spiridium, Hepatitis A,” said Aaron Bernstein, a pediatrician at Harvard Medical School.

“We’ve seen outbreaks of these diseases in the past due to extreme precipitation. The build environment we live in wasn’t designed for the climate we will soon be living in; when you consider half the world’s waterways have been engineered by man, they won’t be able to contain the extra water that will flood them.

“Flooding will certainly lead to mosquito-borne diseases but also cause water-borne diseases and also a lack of drinking water. People in Asia and Africa, particularly those living on the coast, will be very vulnerable, climate change could be the straw that breaks the camel’s back in terms of public health.”

The Guardian

Kelly Tomblin, president and CEO of JPS.

Jamaica Public Service Company (JPS) said it wrote off $100 million in debt owed by residential and commercial customers for electricity under its year-end amnesty programme.

It offered customers the opportunity to start the new year at least partially debt free.

The power utility also said it continues to work with the Government, through the Ministry of Finance, to ensure payment for street lights on a timely basis.

In introducing the amnesty, which ran from November to December 2015, JPS said it had identified critical cases where some of its customers’ debts to the light and power provider had accumulated so significantly over time that they had been classified as bad debt.

However, for customers who wanted to regularise their accounts and in some cases restore their electricity, JPS gave residential rate 10 and commercial rate 20 customers an opportunity to negotiate up to 70 per cent debt forgiveness.

Persons qualified to apply were those owing in excess of $50,000 at August 2015 and had their service disconnected; as well as residential and small commercial customers who owed more than $100,000 up to August, but whose accounts were still active.

Last Friday, JPS President and Chief Executive Officer Kelly Tomblin, addressing a media briefing at the company’s offices in New Kingston, said more than 1,000 account holders benefited from the amnesty.

STREET LIGHT REPAIRS ONGOING

As for the issue of defective street lights, Tomblin said repairs were ongoing, while acknowledging that the utility got daily complaints.

JPS has about 100,000 street lights and last year the company replaced 27,700 of them, an average of 514 per week.

“We are replacing street lights, hundreds and hundreds every week, so it’s not that JPS isn’t aware…”, she said.

Against that background, Tomblin said: “There are two things that are going on that we have to fix.

“We are working with the Government right now to find a way for us to get paid more promptly,” she said. “I have a commitment by the minister of finance. We work with him all the time. We all know that we have a lot of different obligations and a lot of different challenges to meet and we do know today that we are working on solutions to run our street lights on, for instance, LED.”

At the same time, she said the company has to be careful how much it invests in the current solution “if we are going to have this three to four year plan to replace them.”

She acknowledged the issue is, for some, one of security, but said the street light problem is compounded by theft.

“With the level of electricity theft, we will never have first-class street lights … we cannot have street lights operating if we have a couple of hundred people stealing,” the utility boss said.

JPS is manager of the national grid and monopoly distributor of electricity supplies. The utility collects around $100 billion per year in billings.

The Gleaner

The Private Sector Organisation of Jamaica (PSOJ) says it is in the country’s best interest to further hedge against the upward movement in the price of oil, a strategy the Government first adopted in June last year.

The hedge purchased by Jamaica last year at a strike price of US$66 has come in for criticism because oil prices are currently falling, and analysts are predicting further decreases this year.

However, PSOJ president William Mahfood said if the world crude prices remain low for an extended period, the options to buy will also be reduced and gives Jamaica an opportunity to hedge at concomitantly lower prices.

“We feel strongly that if the strike prices are attractive and if prices are maintained at these lower levels that it is in the country’s best interest to buy that insurance policy going forward,” Mahfood told Wednesday Business.

Asked if the PSOJ would encourage the Government to negotiate any differently in entering into such contracts, Mahfood, while noting that “it’s really a function of time, and it’s a question of volatility,” emphasised that “if oil prices remain low for an extended period of time, what you will find is that the option prices will come down, and if those prices come down further, it will definitely be in the country’s interest for us to hedge further”.

While some projections are for prices to fall to US$20, Mahfood said that no one knows exactly where they will end up.

“The best analysts in the world will tell you that the oil price might be a US$53 in December or it might be at US$100.”

He said the PSOJ feels strongly about maintaining some sort of stability in terms of the prices, given what the impact the lower costs have had on the economy in terms of energy which has, for example, resulted in lower electricity bills for both households and manufacturers.

In a release on Monday, the PSOJ said it has taken note of commentary on the oil hedge strategy Jamaica effected last year by purchasing options to buy eight million barrels of oil, representing about half the country’s annual requirement, at a price of US$66 per barrel.

The total cost of the option, which became effective in June 2015 and expires September this year, was approximately US$20 million.

One argument, the PSOJ said, was that the hedge was a waste of money as oil prices have fallen to US$30 per barrel, and the strike price, where Jamaica would have started to benefit, is US$66 per barrel.

The PSOJ noted that projections last year were for oil prices to recover in 2016 with most expecting it to go past US$66 per barrel and settling at around US$80 per barrel, which at 17 million barrels per year, would have had an annual cost above the strike price of US$234 million.

“If this had happened then we would have saved US$214 million (net of the option cost of US$20m). So for us to even have broken even on the cost of the option, oil prices would have had to go to US$67.20 per barrel (additional US$20 million based on our usage above the strike price),” PSOJ said.

It noted that the hedge is not a contract for supply at the strike price of US$66, but an option to purchase at that price so the only cost would be the US$20 million fee.

“It is also important to note that the amount applied to pay for the hedge was applied while prices were falling, so it was not an additional cost, which was important as it did not reduce already existing consumption spending,” the private sector group said.

“The fact is that we could ill afford oil moving back to US$80 per barrel, and the cost of US$20 million to mitigate a US$200 million risk, like insurance, makes good business sense,” said the PSOJ.

 

The Gleaner