Brian Pengelley
Kelly Tomblin, CEO of the Jamaica Public Service (JPS) Company, may have been bit a melodramatic. For thieving electricity consumers, 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.
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THE Jamaica Public 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.
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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
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.
“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. Read more:
THE Government is to pay the Jamaica Public Service (JPS) some $200 million to remove illegal connections to the service provided to former State-owned sugar factories from the homes of residents of surrounding communities. Minister of Agriculture and Fisheries Roger Clarke told the House of Representatives yesterday that disconnecting the lines from the factories is
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Minister of Finance and Planning, Dr. the Hon Peter Phillips (right), in discussion with Minister of Transport, Works and Housing, Dr. the Hon. Omar Davies, before he closed the 2013/ 2014 Budget Debate in the House of Representatives on May 1.The Government, through the Development of Bank of Jamaica (DBJ), has made some $360 million in loans available for the implementation of energy efficiency and renewable energy projects across various sectors.
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Students at Hammersmith Preparatory School in Trelawny perform during the official opening of the institution last week. More than 70 children are enrolled at the school. – CONTRIBUTED
Daraine Luton, Senior Staff Reporter THE TARGETED reduction of the consumption of energy within the public sector last year failed to meet the announced objective, falling short by two thirds. Energy Minister Phillip Paulwell told
Students at Hammersmith Preparatory School in Trelawny perform during the official opening of the institution last week. More than 70 children are enrolled at the school. – CONTRIBUTED
Daraine Luton, Senior Staff Reporter THE TARGETED reduction of the consumption of energy within the public sector last year failed to meet the announced objective, falling short by two thirds. Energy Minister Phillip Paulwell told |