The price of oil fell to near US$95 a barrel on Monday, as the dollar continued to strengthen against the yen and other major currencies.
Benchmark oil for June delivery fell 87 cents to finish at US$95.17 a barrel on the New York Mercantile Exchange.
The stronger dollar is pushing down oil prices, analysts said. The dollar has risen in recent days against the euro and last week passed the 100-yen mark for the first time in four years.
Since oil is traded in dollars, a stronger dollar makes crude and other commodities less appealing to investors with other currencies.
“This, like the stock market, ends up pulling a lot of money out of commodities and into more reliable risk,” said Carl Larry, president of Oil Outlooks and Opinions, a research analysis firm.
An increase in OPEC’s output, which grew by 280,000 barrels to 30.46 million barrels a day in April compared with March, also helped drag down prices by boosting concerns about excess supply.
And weak refining data from China further undercut crude. Government statistics showed China’s refining output in April was the lowest since last August.
drift higher
Brent crude, which is a benchmark for many international oil varieties, was down US$1.09 to end at US$102.82 a barrel on the ICE Futures exchange in London.
United States drivers saw gasolene prices drift higher over the weekend, up two cents since Friday to a national average of US$3.58 a gallon.
In other energy futures trading on Nymex, wholesale gasolene fell four cents to finish at US$2.82 a gallon, heating oil lost two cents to end at US$2.89 a gallon and natural gas rose two cents to finish at US$3.93 per 1,000 cubic feet.
The price of oil fell to near US$95 a barrel on Monday, as the dollar continued to strengthen against the yen and other major currencies.
Benchmark oil for June delivery fell 87 cents to finish at US$95.17 a barrel on the New York Mercantile Exchange.
The stronger dollar is pushing down oil prices, analysts said. The dollar has risen in recent days against the euro and last week passed the 100-yen mark for the first time in four years.
Since oil is traded in dollars, a stronger dollar makes crude and other commodities less appealing to investors with other currencies.
“This, like the stock market, ends up pulling a lot of money out of commodities and into more reliable risk,” said Carl Larry, president of Oil Outlooks and Opinions, a research analysis firm.
An increase in OPEC’s output, which grew by 280,000 barrels to 30.46 million barrels a day in April compared with March, also helped drag down prices by boosting concerns about excess supply.
And weak refining data from China further undercut crude. Government statistics showed China’s refining output in April was the lowest since last August.
drift higher
Brent crude, which is a benchmark for many international oil varieties, was down US$1.09 to end at US$102.82 a barrel on the ICE Futures exchange in London.
United States drivers saw gasolene prices drift higher over the weekend, up two cents since Friday to a national average of US$3.58 a gallon.
In other energy futures trading on Nymex, wholesale gasolene fell four cents to finish at US$2.82 a gallon, heating oil lost two cents to end at US$2.89 a gallon and natural gas rose two cents to finish at US$3.93 per 1,000 cubic feet.
Kelly Tomblin, CEO of the Jamaica Public Service (JPS) Company, may have been bit a melodramatic. For thievingelectricityconsumers, as draining as they are on the company, and as difficult as they make her life, mask the larger problem faced by the light and power provider – and Jamaica.
For electricity theft in Jamaica is symptomatic of more fundamental issues, among which are the Government’s failure to advance and implement a clear energy policy; its ‘outsourcing’ of elements of its social welfare programmes; and the JPS’s own failure, over a long time, to adequately invest in the technologies to allow it to operate as efficiently as possible in a market it says it wants to be in. Which, of course, doesn’t derogate from the facts presented, or the logic of the argument advanced by Ms Tomblin last Friday.
JPS’s inability to adhere to agreed debt-to-earnings ratios potentially imperils its relationship with its lenders and could, as their auditors pointed out in their review of its 2012 accounts, present a risk to the company “as a going concern”.
Reducing the 14 per cent of electricity that is stolen would be an inherently good thing. It would enhance the viability of the power company, as well as ease the burden on those consumers who now pay.
But there is another pertinent matter which the Government and the JPS must address squarely. The estimated US$30 million, or nearly J$3 billion, lost to the thieves is a sum inflated by policy failures and inefficiencies. Faced with this fact, a serious government would end the dithering over what fuel is to be used to generate electricity, as well as conclude the becalmed bids for new power plants. Nothing, though, gives us confidence that this will be the case.
Cheaper fuel is essential
The fact, however, is that the electricity produced from expensive oil at US 41 cents per kWh is unviable for Jamaican firms and domestic consumers. Cheaper fuels and modern power plants are essential. Procrastination by the Government in giving policy directives on the former, and JPS’s failure to act on the latter when that was in its purview, helped to create today’s crisis.
Further, Jamaica’s perennially weak economy, with its high rates of joblessness and underemployment, means that electricity, at its real cost, is beyond the effective demand of many consumers, who nonetheless have expectations of it. So, they steal it and have, in the process, been enabled by the Government, as was all but admitted by Roger Clarke, the agriculture minister, in relation to whole communities on sugar estates that were allowed to tap into government entities for their electricity.
This is, at once, reflective of a kind of blind-eye social welfare and a breakdown of law and order. Theft becomes normal. Attempts to break the cycle often erupt in violence.
It is obvious that Jamaica must get on with the policies and projects that will lower electricity tariffs. The Government, too, must have the will to address the thievery.
It is also in the JPS’s interest to invest in the smart technologies that make the stealing of the product difficult.
These are the kinds of things that firms sometimes have to do to survive in a market. And sometimes are made to do as monopolies in regulated markets.
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.
THE JamaicaPublic Service (JPS) says it has sought the assistance of the Office of Utilities Regulation (OUR) and the Government in crafting strategies to deal with electricity theft in a more effective manner.
“The root of the problem is crime and poverty, and no technological solution is going to fix that,” said JPS President and CEO Kelly Tomblin, in addressing questions regarding the failure of the recently implemented Resident Advanced Metering Infrastructure (RAMI) system to eradicate electricity theft.
Jamaica Public Service President and CEO Kelly Tomblin speaks with Gary Barrow (centre), senior JPS vice-president, and Keith Smith, information technology director at the light and power company, before Thursday
It’s all smiles for from left: JPS’s Kirsten Pedersden, customer care manager, St Ann; Kenyatta Campbell, parish manager, Westmoreland and Antoinette Burton-Steer, parish manager, Hanover; at their Region West Media Appreciation Breakfast at The Pelican in Montego Bay Tuesday morning.
Combining solid experience with a new breed of customer care representatives, the Jamaica Public Service Company gathered with media practitioners from Western Jamaica and St Ann on Tuesday, at Montego Bay’s most popular restaurant- The Pelican.
Tagged, the ‘Region West Media appreciation breakfast’, the utility company succeeded in getting North Coast Time’s Franklyn Knight out of his bed, to travel from the garden parish to the second city. A host of media practitioners defied their 10:00 am work schedule, to mingle with parish customer care manager, key account and e-Store managers, as well as the man task with changing the company’s image in the west, Blaine Jarrett.
Yes, it’s a new JPSCo, since the affable Kelly Tomlin touched down on Jamaican soil. Tomlin is bent on changing the image and perception of the company from that of ‘uncaring’ to personable-and her team have bought into the mandate.
“The regions were established to take service to our customers,” explained Blaine, who is the regional director for region west.
With the power vested in them to turn around the company, community relations and expeditious service are major planks in the process.
It’s all smiles for from left: JPS’s Kirsten Pedersden, customer care manager, St Ann; Kenyatta Campbell, parish manager, Westmoreland and Antoinette Burton-Steer, parish manager, Hanover; at their Region West Media Appreciation Breakfast at The Pelican in Montego Bay Tuesday morning.
Combining solid experience with a new breed of customer care representatives, the Jamaica Public Service Company gathered with media practitioners from Western Jamaica and St Ann on Tuesday, at Montego Bay’s most popular restaurant- The Pelican.
Tagged, the ‘Region West Media appreciation breakfast’, the utility company succeeded in getting North Coast Time’s Franklyn Knight out of his bed, to travel from the garden parish to the second city. A host of media practitioners defied their 10:00 am work schedule, to mingle with parish customer care manager, key account and e-Store managers, as well as the man task with changing the company’s image in the west, Blaine Jarrett.
Yes, it’s a new JPSCo, since the affable Kelly Tomlin touched down on Jamaican soil. Tomlin is bent on changing the image and perception of the company from that of ‘uncaring’ to personable-and her team have bought into the mandate.
“The regions were established to take service to our customers,” explained Blaine, who is the regional director for region west.
With the power vested in them to turn around the company, community relations and expeditious service are major planks in the process.
Participants listen attentively to Mauricio Pulido, Texaco CEO. – Contributed
GB Energy-Texaco celebrated its first retailers conference of 2013 with a complete agenda on business strategy, service stations’ performance, logistics and maintenance, customer service, and most important, the company’s vision for the business in Jamaica.
Mauricio Pulido, GB Energy’s chief executive officer for Jamaica, welcomed retailers and expressed thanks for their loyalty, confidence and collaboration in the company’s success.
After outlining the profile and scope of GB Group and its businesses within the Caribbean to participants, GB Energy’s executives presented the vision and commitment of Texaco in Jamaica – becoming the leader in the market in several aspects of the business including: quality of service, high operational standards, product offering, brand recognition, gasolene additive, customer service and safety.
“By mastering all aspects of the business, being consistent with our high performance standards and working together as a team, we will reach our objective and become the number-one brand of preference for customers in the petroleum industry throughout the island,” Pulido said.
During the conference it was announced that GB Energy will keep the Texaco brand, as well as its commitment to society, through social programmes in areas such as health, education and environment.
AWARDS PRESENTED
A highlight of the conference was the the presentation of awards for their exceptional performance to dealers. Categories such as safety, wet-stock management, million-gallon award, highest-volume award and customer-first champions.
President of the Jamaica Gasolene Retailers Association (JGRA), Derrick Thompson, noted his pleasure at initial gestures from the company, and the open and frank discussions between Chevron’s management and retailers.
“The retailers’ concerns were on the mark and the responses to the concerns were frank. I wish GB group all the best in navigating the Jamaican territory,” Thompson said.
The conference took place at the RIU Club hotel in Ocho Rios, St Ann, with the participation of 56 retailers islandwide and and Texaco’s executives Mauricio Pulido, David Sterling, Howard Henry, Marcia Johnson, Garfield Edwards, Cyville Martin, Dumile Morgan, Heather Daley-White, Andrea Smith, Edmond Lobban, Antonette Lawman, George Simpson and Latoya Winter.
The Jamaica Public Service Company (JPS) is expressing concern that the long-running problem of electricitytheft could cause its demise.
“For the JPS this might very well be the death knell … . There is no business in Jamaica that can lose $2 million to $3 million per month and still be viable, so for us it has reached a very critical point,” declared JPS President and CEO Kelly Tomblin yesterday during a media briefing.
Tomblin underscored that the JPS was at a financial precipice and could fall because it is in breach of a debt covenant which could trigger a demand for it to pay off US$425 million in debt.
According to Tomblin, the financial state of the company is worsened by electricity theft which triggered a penalty of US$30 million last year. That more than doubled the US$12.9 million which the JPS recorded as profit for the year.
“It is causing deteriorating financial performance that keeps me from doing many of the things that my team and I want to do to improve customer service,” Tomblin told journalists during a media briefing at the JPS’ New Kingston office.
“It is not just the theft, but it is also the penalty that we get because of the theft, so we are up against it and we don’t know how to combat,” added Tomblin.
Illegal connections removed
She said for the first three months of this year more than 54,000 illegal connections (throw-ups) were removed; 75 persons arrested and approximately 36,000 electricity audits conducted.
The JPS has also intensified the introduction of its Residential Automated Metering Infrastructure (RAMI) tamper-resistant metres with more than 22,000 persons connected at a cost of approximately $1,000 each. In addition, a special unit has been established to go after the commercial entities and other large users involved in electricity theft.
But Tomblin noted that these measures have not significantly reduced the level of electricity theft across the island.
“Estimates are that we still have 150,000 or up to 200,000 households stealing electricity and that’s against the backdrop of less than 600,000 customers … that could be a third of the people stealing so that is significant.”
Multifaceted approach
According to Tomblin, the problem of electricity theft has to be addressed in a multifaceted way because it is a socio-economic problem that cannot be addressed only by the JPS.
“We have a goal in the country that 100 per cent of Jamaicans should have access to electricity … but everybody cannot afford electricity, so what is the stop gap or the bridge? There is also the community acceptance of theft because we don’t see persons being arrested in droves.”
Tomblin argued that the root of the problem is crime and poverty and until these problems are addressed electricity theft will continue.
She charged that there needs to be tighter legislation with harsher penalties for electricity theft, even as she noted that the JPS does not benefit from the arrest of persons caught stealing electricity.
The JPS boss added that it needs the input of several different governmental and non-governmental organisations to come up with new measures to deal with the problem of electricity theft.
“We all have to get around the table and say let’s find a different solution because this one isn’t working.”
KELLY Tomblin yesterday reiterated the dire financial state of the Jamaica Public Service Company (JPS), and expressed disappointment that two State-owned sugar companies in Clarendon and Westmoreland allowed residents of neighbouring communities to steal electricity amounting to more than $100 million.
“We have about 230 people, we are spending a lot of money each year working on preventing theft. Those people are out in the community, serving my customers, helping to figure out how to get smaller payment frameworks and doing other customer service, improving reliability,” Tomblin told a news conference at the JPS head office in New Kingston.
Jamaica Public Service Company President and CEO Kelly Tomblin addressing a news conference at the JPS head office in New Kingston yesterday.
“What happens when theft of service occurs. For JPS, it may very well be the death knell. Last year, we were fined by the OUR $30 million, that’s two-and-a-half times our total profit and we again submit that there is no business in Jamaica that can lose two to three million dollars a month and still be viable,” she said, adding that the company is facing bankruptcy as it has broken several covenants with its lenders.
“So for us it has reached a very critical point. This has led to us being in breach of our financial covenants. We have been in breach since last year and we continue to be in breach. What that means is that there is a covenant in our loan agreement with our lenders that said we would maintain a specific EBITDA (earnings before interest, taxes, depreciation and amortisation) to debt ratio and we haven’t met that, and we haven’t met it for a year,” Tomblin said.
She said that the company’s lenders have been granting it waivers, but JPS is not earning enough to meet its debts.
“That is a violation of our agreement, and now we have a lender that has not given us a waiver,” she said.
“So in the US, we call it a financial cliff; we call it a precipice here, but the fact remains that JPS cannot be viable in the current framework.”
Tomblin spoke to the electricity theft issue affecting the sugar estates in an interview with the Jamaica Observer after the news conference.
“It shocks the conscience,” she said, “because if you drive around right now you see it [electricity theft] everywhere. We [Jamaicans] have become very immune to it and I think that is what has gone on here.”
Yesterday’s Observer lead story reported Agriculture Minister Roger Clarke as saying that the Government will have to fork out $200 million to remove illegal connections set up at the sugar plantations.
Disconnecting the illegal connections, Clarke said, was the “only outstanding matter” in negotiations with the new owners of the factories, Pan Caribbean Sugar Company, to invest in a US$100-million sugar refinery.
For years, residents in neighbouring communities were allowed free access to electricity and irrigation water which cost the sugar company $100 million in additional costs annually. The $200 million is being sought to pay for a regularisation programme for the affected communities.
Yesterday, Tomblin did not say whether the regularisation process had started, or if the Government had paid any portion of the regularisation costs.
She, however, bemoaned the debt the Government had incurred for electricity, and said the State will have to pay up if the JPS is to remain viable.
“We certainly have difficulty collecting from the Government, and of course the Government has had its woes,” Tomblin said. “But remember, we bill the Government in Jamaican dollars and we have to pay most of our suppliers, including Petrojam, in US dollars. So the longer they take to pay us, the more detrimental it is to JPS.
“So we really do need to get everyone to be current, and for the Government to repay JPS what it owes us,” she said.
In the meantime, Tomblin said that new measures are to be implemented to detect electricity theft by major organisations which, she said, is harder to detect than those set up by ordinary citizens.
Jamaica Public Service Company President and CEO Kelly Tomblin addressing a news conference at the JPS head office in New Kingston yesterday.
