No worries for Ja over electoral change in Venezuela — PCJ
Up to November, Venezuelan president Nicolas Maduro had been promising more under the PetroCaribe programme to Caribbean countries, announcing more resources for the eastern Caribbean.
Now, following the parliamentary victory by Democratic Unity Roundtable (MUD) some expect that changes may be in the offing.
The PetroCaribe programme is an agreement between Venezuela and some Caribbean territories to purchase oil on preferential terms. It allows the Government of Jamaica (GOJ) to convert 40 per cent of payments annually to a loan repayable over 25 years.
The funds flowing from the arrangement are managed by the PetroCaribe Development Fund (PDF).
Despite the debt buy-back executed this year, Jamaica is still heavily reliant on PetroCaribe funds for low-cost budget support.
In July, Venezuela allowed the GOJ, based on the net present value of the debt outstanding at December 2014, to purchase the PetroCaribe debt totalling US$3.2 billion for US$1.5 billion.
But the Ministry of Finance and Planning still remains the fund’s largest borrower.
Some analysts have posited that the escalating budget constraint faced by the Venezuelan government could trigger a drastic amendment of the PetroCaribe arrangement.
However, chairman of the Petroleum Corporation of Jamaica (PCJ) and advisor to the Ministry of Science Technology Energy and Mining (MSTEM) Christopher Cargill says he expects to see business as usual.
“The election was a parliamentary victory. It was not the national election which is due in 2019. No change can be executed to PetroCaribe before the national elections,” Cargill explained.
He said that in retrospect, Jamaicans should show appreciation for the decade-old arrangement.
“I think Jamaicans really need to be grateful for the benefits received over the years,” he stated, citing the avoided pressure on foreign exchange resources.
Others, including US-based analysts, have projected changes in the offing based upon the effect in Venezuela of declining oil revenues where increasing socio-economic chaos has become evident.
Oil accounts for roughly 96 per cent of export earnings, about 40 per cent of government revenues.
Forecasts have placed oil prices to stay at US$60 per barrel on average due through to 2020 owing to levels of supply from OPEC members and the rapid increase in natural gas and shale oil production.
However, Cargill is convinced that the next three years will hold nothing new for PetroCaribe and its client countries.
He anticipates that a subsidiary of Petróleos de Venezuela (PDVSA) will move ahead to honour its promises to upgrade the Petrojam refinery which it partially owns, a move expected to make the company more competitive regionally.
Jamaica, in 2006, signed an agreement with Venezuela through PDV Caribe, a subsidiary of PDVSA for a 49 per cent stake in Petrojam with a subsidiary agreement to move production from an average of 30,000 to 50,000 barrels of petroleum products per day through expansion.
At last report, PVDSA was reviewing proposals received for the upgrade of the petroleum refinery from two Chinese sources.
The refinery currently supplies about 80 per cent of the local non-bauxite market and 70 per cent of the national market.
A 2008 estimate put the project cost for expansion at US$758 million, funds that Jamaica lacked and which Venezuela has been unable to deliver to date.
Members of the Jamaican delegation to COP21 at the Wider Caribbean Pavilion (from left) Ambassador Sheila Sealy Monteith, under secretary for the Multilateral Affairs Division at the Ministry of Foreign Affairs and Foreign Trade; Vilma McNeish, ambassador to the Kingdom of Belgium and the European Union; Senator Arnold J Nicholson, minister of foreign affairs and foreign trade; Dr Orville Grey, senior technical officer in the Ministry of Water, Land, Environment and Climate Change; and Jeffrey Spooner, head of the Meteorological Service of Jamaica.
PARIS, France — An unprecedented coalition of close to 40 governments, hundreds of businesses and influential international organisations have called for accelerated action to phase out fossil fuel subsidies, a move that would help bridge the gap to keep global temperature rise below 2°C and perhaps close to the 1.5°C for which Caricom and other Small Island Developing States are advocating.
On the opening day of the UN Conference on Climate Change (COP21) last week, New Zealand Prime Minister John Key formally presented the Fossil Fuel Subsidy Reform Communiqué to Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), on behalf of the Friends of Fossil Fuel Subsidy Reform, The Prince of Wales Corporate Leaders Group and other supporters of the communiqué.
The communiqué calls on the international community to increase efforts to phase out perverse subsidies to fossil fuels by promoting policy transparency, ambitious reform and targeted support for the poorest.
Governments spend over $500 billion of public resources a year to keep domestic prices for oil, gas and coal artificially low. Removing fossil fuel subsidies would reduce greenhouse gas emission by 10 per cent by 2050. It would also free up resources to invest in social and physical capital like education, healthcare and infrastructure, while levelling the playing field for renewable energy.
“Fossil fuel subsidy reform is the missing piece of the climate change puzzle,” Prime Minister Key said. “It’s estimated that more than a third of global carbon emissions, between 1980 and 2010, were driven by fossil fuel subsidies. Their elimination would represent one-seventh of the effort needed to achieve our target of ensuring global temperatures do not rise by more than 2°C. As with any subsidy reform, change will take courage and strong political will, but with oil prices at record lows and the global focus on a low carbon future, the timing for this reform has never been better.”
In accepting the communiqué, Figueres said: “These subsidies contribute to the inefficient use of fossil fuels, undermine the development of energy efficient technologies, act as a drag on clean, green energy deployment and in many developing countries do little to assist the poorest of the poor in the first place.
“The huge sums involved globally could be better spent on schools, health care, renewable energies and building resilient societies. The current, very low oil prices are a good opportunity to really get going on this issue.”
Chair of The Prince of Wales Corporate Leaders Group (CLG) and former president of Alstom Power, Philippe Joubert, also spoke last Monday.
“The CLG’s long-standing efforts to put a price on carbon, including most recently working with the World Bank through the Carbon Pricing Leadership Coalition, will soon deliver results. It doesn’t make sense that, at the same time, governments artificially deflate the cost of coal, oil and gas, the primary cause of GHG emissions. Fossil fuel subsidies must be ended to stop this contradiction and enhance a real transition to low carbon energy,” he said.
For the OECD’s part, Secretary-General Angel Gurría commented that countries need to demonstrate their seriousness about combating climate change with concrete actions and policies.
“Reforming harmful fossil-fuel support is a good place to start,” Gurría stressed.
Close to 40 countries have endorsed the Fossil Fuel Subsidy Reform Communiqué, including Canada, Chile, France, Germany, Italy, Malaysia, Mexico, Morocco, Peru, The Netherlands, The Philippines, Samoa, the United Kingdom, the United States, Uganda, and Uruguay.
The communiqué is supported by The Prince of Wales’s Corporate Leaders Group (23 global companies employing two million people worldwide with combined revenues exceeding US$170 billion) and other business organisations working with thousands of corporations and investors, including The B Team, the World Business Council for Sustainable Development and the We Mean Business coalition.
The communiqué has also been endorsed by influential international organisations, including the International Energy Agency, the OECD and the World Bank.
Eliminating fossil fuel subsidies can accelerate the economic shift needed to tackle climate change and remove one of the obstacles to delivering the low-carbon future for which COP21 is aiming.
“History will prove fossil fuel to be a dead end,” Stefan Löfven, prime minister of Sweden, said. “Sweden will be amongst the first fossil-free welfare nations of the world. And eliminating fossil fuel subsidies is an important step on this path.”
Hakima El Haite, Morocco’s environment minister and candidate for the presidency of COP22, added: “Not only do fossil fuel subsidies put a strain on government coffers but they also don’t help the poorest of society.”
COP21 began on November 30 and will run until Friday, December 11.
Jamaica Public Service Company (JPS) claims that switching all its low-consuming users to prepaid meters would increase the risk profile of the utility provider, and secondly, cost it hundreds of millions in lost non-fuel revenue annually – an ironic twist given that the meters are meant to curtail losses.
JPS currently offers prepaid meters in select inner-city areas under a pilot programme, but its admission of the cost puts the timeline for its larger role in question.
“If all customers consuming less than 100 kilowatt hours switched to the prepaid service, JPS stands to lose J$399 million in non-fuel revenues per annum,” the power utility said in its annual tariff application documentation published late last month by its regulator, the Office of Utilities Regulation (OUR).
“By any measure, this exposure is significant and further increases the risk profile of the company, especially given the challenges in meeting certain financial covenants.”
JPS holds US$324 million in long-term loans, and its financial covenants require a minimum undisclosed debt to earnings before interest tax depreciation and amortisation. The company was fully compliant with all its loan obligations as at September 2015.
Customers that consume less than 100 kWh are classified as Rate 10 users. These users usually are low-income households but account for some 222,000 of the 594,000 JPS customers, according to OUR documentation.
Regular customers – Rate 20 – who consume less than 75,000 kWh per month would remain revenue neutral for the switch to prepaid meters.
JPS added that this level of loss is “unsustainable” and is only acceptable for the remainder of the prepaid pilot which offers prepaid meters to a relatively small number of customers. The power utility wants the OUR to increase the prepaid rates to Rate 10 customers in order to remove a large part of that shortfall.
“We would, however, like to state that the rate structure should aim for revenue neutrality as the prepaid programme evolves,” said JPS.
The company proposed an adjustment to non-fuel tariff rates for Rate 10 prepaid customers to $14.4311/kWh for the first 119kWh in a 30-day cycle; and $20.5719/kWh for every kWh above 119kWh in a 30-day cycle.
The OUR rejected that specific JPS proposal. It approved instead a Rate 10 prepaid rate of $13.19/kWh for the first 100kWh in a 30-day cycle and $20.85/kWh for every kWh thereafter for a 30-day cycle.
JPS made US$23.7 million net profit over nine-months ending September 2015 on revenues of US$583 million which nearly doubled the US$12.5 million in profit earned a year earlier.
There was no response to mailed queries and calls to JPS for comment on this story up to press time.
The oil-fired JPS power plant in Old Harbour Bay, St Catherine is to be converted to LNG.
Spanish firm Abengoa SA has revealed the value of the upgrade and employment prospects for the 190MW power plant project amid pre-bankruptcy filings in its home market.
“The contract for the plant, which will be powered by natural gas and cooled by seawater, is worth more than US$200 million,” said Abengoa in a release.
The engineering and renewable energy firm was selected as preferred bidder by Jamaica Public Service Company (JPS), and the parties are in the process of finalising the contract for the LNG-fired power plant. JPS has said the full project cost would be closer to US$300 million.
Abengoa has about four months in which to secure deals with its creditors and restructure its debts if it is to escape full bankruptcy. JPS has said it is not ready to give up on its preferred bidder just yet, but is monitoring the situation.
Abengoa said it will be responsible for the design, engineering and construction work of the plant that will replace an existing fuel-oil facility and is expected to “create between 300 and 500 jobs during the construction phase”.
JPS wants to decommission the existing fuel-oil plant and move to a natural gas facility to create a cleaner, efficient and more reliable source of power, added Abengoa.
The more than 40-year-old Old Harbour plant remains one of the least energy efficient in the island and its upgrade would form part of the Jamaican Government’s drive to increase cleaner forms of fuel. Jamaica aims to increase renewable energy reliance to 20 per cent of the energy output within the medium term.
SEAWATER COOLING SYSTEM
“The plant will use a seawater cooling system that returns the warm water without adversely impacting the environment. Abengoa’s design will use the existing infrastructure as much as possible, requiring less power and improving the overall output of the plant,” said the Spanish firm in late November, adding that the project would extend Abengoa’s experience in turnkey combined cycle projects to the Jamaican market.
The company informed that it filed for insolvency protection on November 25 before the Mercantile Courts of Seville. The company also indicated that it would continue negotiations with its creditors with the objective of reaching an agreement that ensures the company’s financial viability, “under the protection of Article 5 of the Spanish Insolvency Law”.
The company recorded a €194 million net loss attributable to its parent over nine months ending September 2015 on revenues of €4.87 billion. It holds €6.2 billion in total debt while its earnings before interest tax and amortisation totalled €1.3 billion or 4.5 times net leverage.
Abengoa’s other major combined-cycle projects include the 640MW plant in Centro Morelos, Mexico, and the 440MW combined cycle plant in Portland, Oregon, United States, currently under construction. More recently, Abengoa was awarded two combined cycle plants in Mexico – Nuevo Pemex 680MW, and Norte III, 924MW.
WASHINGTON, United States (CMC) — Jamaica is the only Caribbean Community (CARICOM) country that will benefit from an Inter-American Development Bank (IDB) multimillion-dollar-funded regional Energy Efficiency Green Bond Facility.
The IDB said that it has approved financing to establish the facility and that the programme was selected to receive up to US$217 million in additional funding as one of eight projects worldwide in the first round of allocations announced by the Green Climate Fund (GCF) earlier this month.
“This private sector programme stands out for its innovative financial approach, involving small and medium enterprises and the potential mobilisation through capital markets of funds from different institutional investors such as pension funds and insurance companies,” said Gema Sacristan, IDB’s Financial Markets Division Chief.
Providing an alternative financing mechanism for energy efficiency projects through the issuance of green asset-backed securities (ABS), the programme will also contribute to the development of capital markets in the region.
The programme will introduce green ABS following the Green Bond Principles standards and will foster socially and environmentally responsible investments.
“The approval of this programme furthers our commitment to supporting Latin American and Caribbean countries in the implementation of their proposed Intended Nationally Determined Contributions (INDCs),” said Amal-Lee Amin, IDB’s Climate Change and Sustainability Division Chief.
“Tapping into domestic capital markets for refinancing of energy efficiency is key for increasing the scale of investment for de-carbonisation over the medium and longer-term.”
IDB said that Mexico will be the first country to implement this programme, followed by the Dominican Republic, Jamaica, and Colombia.
The IDB’s loan of up to US$400 million will be complemented by a loan of up to US$50 million from the China Co-Financing Fund, administered by the IDB, in connection with the first utilisation of the facility in Mexico.
The Office of Utilities Regulation (OUR) has announced that it no longer has responsibility for the Net Billing Programme.
The net-billing system, which was introduced in 2012, allows persons who own renewable energy generators to generate electricity for personal use, and sell excess energy to the national grid.
This process was being led by the OUR.
However, the OUR said the deletion of Condition 18 of the Amended and Restated All-Island Electric Licence and the provisions in the Electricity Act, 2015, which came into effect in August, means that it no longer has authority to lawfully engage in the addition of generating capacity to the national grid.
ELECTRICITY ACT
It said Section 9 (2) of the Electricity Act specifically excludes the OUR’s involvement in accepting applications and making recommendations to the minister of science, technology, energy and mining for licences.
The OUR said that section provides that the minister has exclusive authority over the issuing of licences.
The OUR said that as a result, it cannot lawfully assume responsibility for the licensing process and, therefore, it considers its substantive role in the Net Billing Programme at an end.
POTENTIAL home owners in search of environmentally friendly surroundings have just got lucky.
Developers of what is being touted as Jamaica’s “first green residential community” last week broke ground for the construction of 114 energy-efficient homes in Greendale, St Catherine, called Green Village.
Project manager Paul Soegaard told the Jamaica Observer that the phased development will begin later this month and is expected to cost roughly $1 billion. He added that the developers are looking to employ up to 200 individuals to complete the project.
The gated community features 48 two-bedroom single-family homes, 24 two-bedroom apartments and 42 super studio apartments, spanning roughly 930, 717 and 475 square feet respectively.
Starting at $7.9 million, the complex is located a few metres before entering Spanish Town and is overlooked by the well established residential community, St Jago Heights. Amenities of the community include a swimming pool, clubhouse, BBQ and green area and a play area.
The development is a joint financing project with the National Housing Trust and the Green Village Country Club developers.
“Under a short- to medium-term housing programme developed by the NHT, some 9,000 housing solutions will be funded by the Trust over the next two years to enable thousands of families to realise their dream of owning a home,” the NHT stated in a release to the public.
The government agency hopes to boost the housing solutions available to contributors and noted that some 42 housing solutions are currently buimg built across the island. Of that number, St Catherine has a total of 11 developments including the Green Village, followed by Clarendon and Kingston and St Andrew, which each have seven developments.
“It’s driven by fundamentals,” Soegaard told the Sunday Finance. “First of all, attainable lands are not easy to find these days and this development is really the closest to Kingston. That’s the main driver.
“We were lucky enough to own these lands for a number of years, and with the demand for housing we just decided to build the first green housing development in Jamaica. There is great demand for housing coming out of the Kingston area, spilling all the way over to Old Harbour as annual surveys by the NHT indicates.
“The connection to the Green Village in Greendale, St Catherine, is by coincidence, our name is driven by best practices and building strategies, but I think they complement each other,” the project manager stated.
Green Village is designed to be energy-efficient and includes features such as solar water heaters, water and energy-reducing features for faucets and toilets. The development is also designed to take advantage of passive energy and natural light instead of purchased electricity or natural gas.
“It means that the houses are built of aerated concrete to foster cooler homes than the traditional ones and designed so that you can get a lot of sunlight without the rays passing through,” Soegaard explained.
The architectural design of the complex also provides for renewable energy-powered street lighting, Bahamas sun shades which also function as hurricane shutters and burglar bars, biodigester and reed bed sewage treatment plants which give a much higher level of treatment than septic tanks, storm water retention, grey water recycling, and xeriscaping — the practice of landscaping the common area with plants that use little to no water.
With regards to further expansion, Soegaard says there are plans underway for the development of a second phase based on sales demand.
“It’s dependent on a number of factors, but we have the option to do a phase two — though nothing is confirmed at this point,” he said.
BY KARENA BENNETT