It’s one of the costliest crimes plaguing Jamaica, but few people recognise the scope and gravity of this parasitic add-on.

The Jamaica Public Service Company (JPS), the monopoly distributor of electricity across the island, lamented this past weekend that it has lost US$30 million to electricity theft so far this year, and spends another US$30 million annually on technology to curb the piracy. Combined, that represents the equivalent of J$5.4 billion that inflates the cost of power to Jamaican households and businesses teetering on the edge of survival.

“About 14 per cent of the electricity produced by JPS is stolen, and the cost of this theft is shared by both JPS and our customers,” says Kelly Tomblin, JPS’s president and CEO.

Of course, that’s not the whole story. Jamaica’s electricity costs are meteoric because of JPS’s outdated plants, which deliver energy inefficiently.

Energy cost, as this newspaper has repeatedly emphasised in these columns, is the most crucial factor behind the uncompetitiveness of the Jamaican economy. This handicap puts Jamaica at a severe disadvantage internationally and against regional neighbours such as Trinidad and Tobago, on which misplaced rage has been directed for its one-sided trade relationship, on which Jamaica is running a deficit of nearly US$1 billion on mostly oil imports.

Scores, if not hundreds, of businesses that have foundered name electricity cost to be among the main reasons, if not the primary one, for their collapse. Jamaica pays up to US$0.40 per kilowatt-hour for energy – JPS will be quick to remind that August’s rate was eight cents cheaper – six times that of Trinidad and Tobago.

Phillip Paulwell, the energy minister, has been a vigorous cheerleader for the dismantling of the monopoly, which he believes will drive down costs to consumers.

Mr Paulwell predicates his vision for a liberalised electricity sector on foreign investors indulging their appetite among a Jamaican population willing to give its hand to the suitor with the sweetest proposal. But Mr Paulwell’s romanticised notions seem to ignore the compelling reality that investors may not gamble money on Jamaica’s unreliable national security structure.

LAW AND ORDER ON HOLIDAY?

The maintenance of law and order is the fundamental role of government, the glue that holds society and the economy together. It is on that score that the Jamaican Government has been found wanting.

JPS, which has decades-old roots in the Jamaican economy, may be less minded to disengage because of the breadth of its capital investment, even if it has to spend an extra US$30 million a year. A new company, however, may be less inclined to yawn at such write-offs for crime.

Politicians of both the ruling People’s National Party and the opposition Jamaica Labour Party have generally winked at the problem of electricity theft. Most inner-city communities are cobwebbed with illegal connections. And unscrupulous business operators and wealthy suburban householders are big on the gig. The police do little to prevent it.

The numbers bear the tale. According to JPS, “Since the start of the year, 38 persons have been arrested for illegal abstraction of electricity, over 5,700 meter irregularities have been discovered, and 14,000 illegal ‘throw-up’ lines removed across the island.” But that’s a drop in the bucket.

Government had better get serious about electricity theft. Or its overtures to investors might be equated with wooing a lover without the vow of protection.

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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It was National Hero Norman Washington Manley who said that the mission of his generation was to achieve political independence. He further said that the mission of the next generation would be to achieve economic independence. But economic independence is clearly a harder task to achieve than political independence. And a main ingredient in the achievement of economic independence is in having independence in electricity.

In the days before the world oil crisis which began in December 1973, independence in electricity was not an issue as oil was cheap. But since that time there has been talk of having alternative sources of energy because of increasingly higher prices. The oil-producing countries then played their underselling game and Jamaica dropped its plans of creating alternative energy because of temporarily cheaper oil prices that sky-rocketed to very higher prices once the alternative energy plans were dropped.

In the 1990s the government of the day decided that our light and power company, the Jamaica Public Service, would be best divested to private people. Government could not manage JPS in such a way that there were not constant power cuts caused by breakdowns of the generators. But private owners are only interested in profit, which is one reason for higher prices. Another reason is the rising prices caused by the US Gulf War. From the 1990s the JPS has been using a certain amount of windmill energy. Then came 9/11 in 2001. The United States of America needed alternative sources of energy to fight their war in the Middle East as the oil available was not enough.

In any case, the available oil was being used by both sides of the war to fuel war planes and whatever else. As a result of all this, oil supplies dwindled and as a consequence oil prices went up. This has brought to the fore once again the argument for greater use of alternative energy, and more important its actual implementation to some extent. It is true that we may be stuck with JPS for many more years as suggested by the headline of Mark Wignall’s column on August 16.

But it does appear that despite all the obstacles listed in Wignall’s column, independence in electricity is slowly but surely coming. Already it is being done by using solar, windmill or a combination of both without going through the red tape, trauma and rigmarole and whatever other delays of attempting to share the grid with JPS. Indeed, solar panels on roofs of houses are becoming very common. Is it the JPS that has gone into solar energy with the street lights on the Highway leading into Portmore, St Catherine, or is it the foreign contractors? Incidentally, JPS also has some hydro-electric power plants and has always had them.

My interest in solar, hydro and windmill is partly out of concern for our political and economic independence and partly subjective. I am an asthmatic and am affected by the smoke from oil generators and also from coal energy – which is being marketed as safe for health due to improved technology, but I am not convinced. I am not really in favour of any source of energy that requires burning for its effectiveness.

And I am aware that in Jamaica, just about everyone has a relative who is asthmatic if they do not themselves suffer from the condition. In other words, “is nuff a wi”.

That aside, both coal and Liquid Natural Gas would be imported, if we went that route. So imported cheap coal as well as cheap LNG would lead to a similar dependence on outside supplies leading to the spending of precious foreign exchange.

I believe that coal and LNG are now cheap because the owners of such commodities are attracting buyers. But both might become expensive if we are put in a position where we cannot do without it because we have nothing else. Indeed, I believe that it is the age-old game of undersell, put the competitor out of business and then jack up the price afterwards.

But to politicians, cheaper electricity translates into more votes at election time. Energy minister Phillip Paulwell promotes cheaper energy, even if it is more hazardous and even if it encourages dependency. But has anyone in the People’s National Party guessed that by the time election comes around the cheap coal and cheap LNG may skyrocket to the point where the voters swing away from the PNP? Or is there a plan by Prime Minister Portia Simpson Miller to call a snap election the minute the electricity prices fall?

Our aim should be to avoid any form of energy that increases dependency and detrimental to health. We should instead be looking towards complete independence in electricity, even if the capital outlay in its initial years is costly, especially with regard to solar energy. And with all the hurdles listed by Mark Wignall, the quicker we move on this the better. To our credit, we have started already.

ekrubm765@yahoo.com

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TREVOR Heaven, president of the Jamaica Gasolene Retailers’ Association (JGRA), has said that service stations will be revamping their operations in a bid to save the sector from extinction.

“We are facing an unprecedented financial challenge,” he told Auto. “At this point, there are four stations in the Corporate Area that are already closed. These are the Total service stations in Harbour View, Half-Way-Tree, shortwood, and Red Hills.”

HEAVEN… four stations in the Corporate Area are now closed

“I intend to seek audience with the management of the French-owned Total Jamaica to see how we can best resolve the issue,” he said.

When contacted, Paula Duncan, HR manager for Total Jamaica, said she could not comment as the company’s managing director, Dr Michael Faulkner, was off the island.

However, the JGRA president said he has been advised that another two service stations in St Catherine and one in Manchester were on the verge of closure, but refused to name the brands.

Heaven, who met with retailers at the JGRA’s Constant Spring Road headquarters on Wednesday, attributed the current downturn in the gasolene retail business to high operational costs, shrinkage due to temperature changes, reduced gross income (low margins and reduced throughput) and increased bank and credit card charges.

The JGRA president said a raft of new measures would have to be implemented.

“We’ll be moving away from full service to self service. We’ll will have discussions with the unions to see how best we can transition,” he said. “While we [the dealers] develop other income streams, we can divert our employees into other areas of activities rather than dislocate them.”

Heaven said dealers would discontinue accepting Master Cards and Visa Cards at service stations as the bank charges are sometimes greater than the profits made.

“Only the NCB Key Card and debit cards will be accepted,” he said.

Heaven said he would also be seeking a meeting with Dr Peter Phillips, minister of finance, planning and the public service, as well as Anthony Hylton, minister of industry, investment and commerce, regarding an amendment to the Weights and Measurement Regulation.

The JGRA comprises 160 members and celebrated its 61st anniversary in April, 2012.

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Dr Carlton Davis, head of the LNG steering committee.Ian Allen / Photographer
Dr Carlton Davis, head of the LNG steering committee.Ian Allen / Photographer

Lower energy prices up in the air!

The Government‘s long-announced plan to introduce liquefied natural gas (LNG) as one measure to reduce electricity rates remains in limbo with no clear indication, when, or if, this will take place.

The proposed 2014 timeline will not be met and the man leading the process, Dr Carlton Davis, is not committing himself to a new timeline.

“We will soon know the full truth,” Davis told a recent Gleaner Editors’ Forum as he noted that the State is now ready to start negotiations with Samsung, which has been selected to construct the LNG infrastructure locally.

“We have just about completed the process of looking at the price quotations of the liquefied gas and within another couple of weeks we will determine whether the whole thing makes senses and if it makes sense how fast we move on it,” said Davis.

Under the original plan supported by successive administrations, LNG would be added to the country’s fuel mix, replacing oil to sharply reduce the country’s energy bill while lowering the price of electricity to consumers.

The plan was made on the assumption that the Jamaica Public Service Company (JPS) would construct a new 360 megawatts power plant in Old Harbour Bay, St Catherine, by 2014.

The JPS has indicated that the plant should be up and running by 2014, but recent concerns from potential financial partners have left a cloud around that project.

The company is also yet to say if it will proceed with the building of the new plant if the Government fails to deliver LNG.

price discussion

Last Thursday, the Government’s technical team reviewed the proposals for the supply of the gas and this week, the LNG steering committee will meet to discuss the price of the gas before making a recommendation to the Cabinet.

“We have the quotations for the infrastructure, we have the quotations for the price of the LNG … there are financial security issues … all these put together will give us a pretty good idea of where we are, then we will meet (and make a decision),” Davis told the Editors’ Forum.

“Issues as to whether we are going to abandon that path wholly or partially will be determined. The real question is whether the JPS will find the price that (the LNG) comes out to at a sufficient comfort level … to give the public a price of electricity that is much lower than they currently pay,” added Davis.

If LNG can be sourced at an acceptable price, the JPS could reduce the fuel cost to its customers by approximately 40 per cent.

According to Davis, “Circumstances will dictate where we go from here. As I said, in just a matter of days we will know what sort of game is on, if a game is on in a certain direction.”

However, despite the price concerns which could derail the project, Davis did not comment on the Government’s decision to select Samsung as its preferred bidder to do the LNG infrastructure when its offer was higher than the bid entered by EXMAR.

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The former head of the Government‘s liquefied natural gas (LNG) steering committee Chris Zacca, is downplaying the impact of the extended delay in the introduction of this product to the country’s fuel mix.

Zacca, who now heads the Private Sector Organisation of Jamaica, told a recent Gleaner Editors’ Forum that criticisms about the State’s slow movement on this critical matter are unfounded.

“I have made the point consistently that if you had all the LNG in the world today, you would have to burn it in your stoves at home because there is nowhere to burn it, so you have to combine your schedule to their (the Jamaica Public Service Company’s) schedule to build a new power plant,” said Zacca.

Without that generating plant there is no project, so the delays are not an issue,” added Zacca.

For years the price of LNG was a fraction of the price of oil, but with increased demand for natural gas in recent years the price has started to increase, with a recent Morgan Stanley research document showing the price at December 2011 more than double what it was in December 2010.

LNG was priced at approximately 50 per cent of oil in 2010.

“Our problem with fuel in this country has resulted … from us trying to make the best be the enemy of good. If we had moved 10, 12 years ago to a new fuel solution, whatever it may have been, even though it might not have been perfect at the time by, now we would have been way ahead of the game,” said Zacca.

According to Zacca, “LNG is not going to come in, no matter what way you do it, at a fraction of the cost of oil. I think, if we are lucky, we can get it 20 per cent below the current price (of oil).”

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