jamaica Archives - Page 15 of 79

Solution To Jamaica’s Energy Problem

July 3, 2014 Webmaster

Our country is fortunate to be located in the tropics with abundant sunshine. However, we failed to utilise the natural free energy available to us.

Now that our country has passed four IMF tests and the macroeconomy is in a better health to attract international lending agencies, it is prudent that the Jamaican Government use all its available resources to negotiate a loan to provide solar energy for residential housing. The programme would be developed in phases. The aim is to get at least 25 per cent residential houses connected within year one.

The Jamaican Government should borrow US$100 million and establish a revolving fund. This programme should be managed by the National Housing Trust (NHT).

Arguably, the NHT is one of the best managed government organisations. This organisation has the requisite resources, infrastructures and locations to execute the programme throughout the country. Using this organisation would reduce the need for a new organisation that would incur additional expenses.

The NHT would be responsible for the following;

Implementation and management of the programme

Managing the funds

Importation of the solar equipment

Installation of the equipment

Collection of monthly payments

Charging a five per cent handling fee

Determining the energy requirement of each house by using the applicant’s last JPS light bill.

Establishing four standard energy solutions based on monthly consumption; 100KW, 200KW, 300KW, and 400KW.

Establishing four standard monthly payment plans of $5,000, $10,000, $15,000 and $20,0000.

Establishing a payment plan for over five years.

Establishing a deposit not exceeding $100,000.

Applicants would be required to do the following;

Make application to the NHT

Make a down payment not exceeding J$100,000.

Make a monthly payment to the NHT.

This initiative would reduce the country’s energy bill, reduce our dependency on foreign oil, and reduce environmental damage. It would also reduce the amount each applicant spends on his monthly energy bill.

JOHN MCINTOSH

Hotel management consultant

jpmcintosh@hotmail.com

New wind farm seeks US$20m from IFC

July 2, 2014 Webmaster

US-OWNED BMR Energy aims to secure US$20 million in financing from the International Finance Corporation (IFC) for its multimillion dollar wind farm in St Elizabeth.

“IFC is considering a $20 million loan to BMR Jamaica Wind Limited to support the development of a 34 megawatt (MW) greenfield wind farm in St Elizabeth Parish, Jamaica,” said the private finance arm of the World Bank in a recent disclosure.

The financing from the IFC would include an “A Loan for its own account of up to US$10 million, and a concessional loan as implementing entity of the Canada Climate Change Programme of up to US$10 million”.

The rest of the debt financing needs of the project is slated to come from a long-term senior loan from the Overseas Private Investment Corporation, the IFC stated.

The planned 34 MW wind farm, which costs US$90 million ($9.9 billion), should slash US$500 million in oil imports over 20 years, company documents indicate.

The wind farm will be adjacent to the existing three MW wind farm in Munroe owned by the national power utility, Jamaica Public Service Company (JPS).

The BMR project should begin construction in the fourth quarter of 2014 and commence operations in mid-2015, stated the IFC.

BMR’s main partner includes American Capital Ltd (ACL), a management firm that seeks to invest in fast-growing companies via debt and equity.

Over the last three years ACL committed over US$2 billion in new investments. It recently increased its focus on investments in its American Capital Energy Infrastructure (ACEI) division with investments in Nigeria and Jamaica.

“ACEI partnered with a veteran management team to create BMR Energy LLC (“BMR”), a new energy company focused on developing and investing in power and related energy infrastructure throughout Central America and the Caribbean,” said the ACEI in its latest annual report. “ACEI committed US$25 million to BMR’s first project, which is a 34 MW wind farm in Malvern, St Elizabeth Parish, Jamaica.”

In September 2013, the Office of Utilities Regulation in Jamaica selected BMR to build, own, and operate the wind project.

The project falls under the Government’s drive to generate 20 per cent of the island’s energy from renewable sources by 2030.

Currently eight per cent of the country’s energy comes from renewable sources (including biomass) or three percentage points lower than the target of 11 per cent by 2012, experts indicate.

Electricity JPS News

JMA Willing To Name Companies That Steal Electricity – Pengelley Gets A Fourth Term

June 27, 2014 Webmaster

JMA President Brian Pengelley. – Rudolph Brown/Photographer

Brian Pengelley was on Wednesday re-elected as president of the Jamaica Manufacturers’ Association (JMA) for a fourth and final term, that will remain focused on unresolved issues that dominated debate last year.

On his list: the high cost of energy, the depreciation of the dollar, the impact of crime on the business environment, and tax policy.

“With the cost of energy at 42 US cents per kilowatt hour, we expect that the process of getting the construction of the 381MW plant back on track will be handled as a matter of urgency,” said Pengelley in his acceptance speech.

He said the JMA would assist Jamaica Public Service Company (JPS) in naming any local company that steals electricity, saying “This pilferage of electricity not only hinders Jamaica’s development but puts a strain on our already scarce foreign-exchange reserves.”

JPS estimates that it loses about 17 per cent of electricity supplies to theft; that the stealing of electricity cost the power company about $11 billion last year; and that eradicating theft could cut electricity costs to consumers by up to 15 per cent.

The utility has said that the problem spans residential and business customers, with the latter said to employ more sophisticated bypass mechanisms.

Regarding the value of the Jamaican dollar, Pengelley said while the association notes the benefits of the International Monetary Fund programme in the rebounding competitiveness of local products, continued depreciation will ultimately hurt competitiveness locally and intentionally, since most local manufacturers must import their raw material.

The JMD is now nudging $112 to the USD, but is expected to fall even further to around $120 this year.

“It disrupts the ability of manufacturers to cope and makes it difficult for the majority of the workforce to satisfy basic needs,” the JMA president said.

Others elected alongside Pengelley were deputy president Metry Seaga of Jamaica Fibreglass Products Limited; treasurer Jason Dear of No Brand Chemicals; and eight directors – Mark Chin of AMG Packaging; Howard Mitchell of Corrpak Jamaica; Dennis Valdez of Newport-Fersan; Radcliffe Murray of Caribbean Producers Jamaica; Stafford Hyde of Architectural Windows and Doors Limited; Michelle Smith of Chocolate Dreams; Raymond Miles of Sun Island and Kathryn Silvera of Caribbean Foods.

tameka.gordon@gleanerjm.com

Alternative Energy JPS News

More Wind Energy Coming For National Grid By September

June 27, 2014 Webmaster

Yesterday, the Jamaica Public Service Company (JPS) signed an agreement to purchase wind energy from BMR Jamaica Wind Limited over a period of 20 years.

Under the terms of the agreement, the JPS also has the option to purchase 20 per cent interest in the project.

BMR Jamaica Wind is investing US$90 million in the project and the JPS says it has supported the venture by providing technical advice and vital wind data, from its own Munro Wind Farm.

According to the JPS, the project is a significant milestone in Jamaica’s energy security and diversification programme, and represents another important step toward reducing the cost of electricity.

Construction of the 34 megawatt wind farm will see 11 turbines being erected near Malvern, St Elizabeth, in proximity to the JPS Munro Wind Farm.

The JPS says the new wind farm is expected to save Jamaica 250,000 to 300,000 barrels of imported oil each year, or up to six million barrels of oil over the 20-year term of the agreement.

The project is also expected to create 90 to 120 new jobs during the construction, phase which begins in August 2014.

Commissioning is scheduled for September next year.

Jamaica Gleaner

Alternative Energy Electricity Energy Saving JPS News Solar Energy

Electricity Should Be Based On Long-Term Considerations

June 5, 2014 Webmaster

With reference to your headline article, ‘Solar power risk’ in The Gleaner Tuesday, June 3, I think that our policy decisions in relation to electricity should be based on long-term considerations, such as the amount of foreign exchange spent on fossil fuels, and the threat of global warming, rather than on return on investments.

My initial observation is that we have failed to capitalise on the opportunities provided by solar energy. Neither Jamaica Public Service (JPS) nor the Office of Utilities Regulation has educated the public on the win-win situation, which is possible with net-billing. More people might be interested in applying for net-billing if the application process were quicker, and the steps involved, detailed instructions for which are given on JPS website, were less onerous. Most people are unaware that you do not need batteries to run a solar system if you have a grid-tie with JPS. In fact, going that route is more environmentally friendly and less expensive, as shown by the calculation below.

BUYING BATTERIES

On the whole, companies selling solar systems encourage purchasers to buy batteries. Their pitch is that you can cut your electricity bills and even get off the grid entirely. They also tell you that JPS pays you only half of what you pay JPS per kWh, which is true, but they don’t tell you that batteries would cost more. Also, most people use more electricity in the summer than in the winter. To get off the grid entirely, one would have to install sufficient panels to supply one’s summer needs, and then one would have excess in the winter. It would be better to be able to send the excess to the grid in the winter and draw from JPS if necessary in the summer.

My calculation is based on a monthly average of 200 kWh being sent to JPS in the day, and drawn from JPS at night. (It does not include the excess amounts being sent or drawn). Nor does it take into account escalating costs. I make the optimistic assumption that a battery bank will last for 10 years.

WITHOUT SOLAR PANELS

200 kWh x J$40 = $8,000 monthly x 12 = $96,000 annually x10 years = $960,000.00

With solar panels and net billing (cost corresponding to half of $40.00)

200 kWh x $20 = $4,000 monthly x 12 = 48,000 annually x 10 years = $480,000.00

Savings: $480,000.00

With batteries, no net-billing, cost would be $0, but cost of 16 batteries at $40,000.00 each with life expectancy 10 years max = $640,000.

In contrast, as Mr John Kistle states, JPS would be faced with the challenge of providing everybody with electricity at peak hours after sunset, or on overcast days. Some of that generating capacity would have to be turned off at peak sunshine hours, thus reducing the return on whatever investment was made in a new power plant. However, solar power would cut down on the amount of fuel needed to run the plant.

Given the importance of the cost of electricity to all of us in Jamaica, perhaps there are some other things we can do. Could there be a consensus, for example, on turning off our fridges during peak hours? Or JPS charging different rates at peak hours?

I think that all stakeholders need to be involved in making these hard decisions.

Jamaica Gleaner;

Alternative Energy Electricity Energy Saving Government News Solar Energy

Caribbean urged to make full use of Green Climate Fund

May 30, 2014 Webmaster

The cost of energy in the Caribbean is the highest in the world, according to the Caribbean Development Bank, but governments have increasingly been pushing renewable sources of energy, like these solar-powered road on Highway 2000 in Jamaica.

GEORGETOWN, Guyana (CMC) – A senior official of the Barbados-based Caribbean Development Bank (CDB) says the operationalising of the Green Climate Fund (GCF) provides an important opportunity for regional countries to not only adapt to climate change but also to mitigate its effects.

In addition, Selwin Hart, the Climate Change Finance Advisor with the CDB said the fund could also assist the Caribbean move towards renewable energy and energy efficiency.

“The cost of energy in the Caribbean is the highest in the world. This represents a serious strike on competitiveness, economic growth and job creation and the GCF presents a once in a lifetime opportunity for countries to have a stable source to financing to address the vulnerabilities both as it relates to importing fossil fuels as well as the impacts of climate change,” he said.

He said one of the major problems facing Caribbean countries in the past has been the lack of capacity to effectively access and use funds even when they were available.

“Many of the requirements for accessing global funds lie outside of the reach of many of the small capacity-constraint counties of the region. You have to undertake a rigorous examination in terms of fiduciary standards and social and environmental safeguards,” Hart said.

The CDB, as part of its climate resilient strategy, has been assisting countries to build that capacity. However, in some instances it is more feasible for that capacity to be built at a regional level rather than at the level of individual countries.

The bank has also been tasked by Caribbean leaders to lead the resource mobilisation effort and in this regard, the CDB is trying to position itself to serve at a regional financial intermediary.

The GCF will support projects, programmes, policies and other activities in developing countries using thematic funding windows’. It is intended to be the centre piece of efforts to raise climate finance of US$100 billion a year by 2020.

Meanwhile, the GCF for which preparations have been ongoing since 2010, has recently been finalised by its board; marking an end to a long and tedious process and giving the green light for the fund to move forward to mobilise resources.

Executive director at the GCF secretariat, Hela Cheikhrouhou, said that this is an important development which will put in place

a multilateral financing institution that is focused on providing concessional financing to both private and public sector beneficiaries in developing countries.

The Jamaica Observer;

Electricity Government JPS News

Stealing With Impunity

May 16, 2014 Webmaster

We share the concerns of paying customers of the Jamaica Public Service Company (JPS) whose electricity will be turned off for half the day in the JPS’s latest effort to combat electricity theft. Yet, we can’t but empathise with the light and power company, the stealing of a large chunk of whose output is enabled by an irresolute State and compliant politicians.

Put another way, by maintaining an environment that insulates the thieves, the Government has up to now forced JPS to provide social welfare to dwellers of poor communities, which is like imposing a tax on the company for earnings it doesn’t make.

JPS is the sole distributor of electricity in Jamaica. It is a majority ownership by Japanese and Korean interests, representing substantial foreign direct investment – something, given Jamaica’s economic circumstance, our Government declares it is keen to encourage.

For years, JPS has been confronted with the theft of its service. Of the 28 per cent of the output that it ‘lost’ in 2013, 60 per cent went to thieves, translating to hundreds of millions of dollars of unrecovered revenue. Such thievery is often rationalised as the result of the high price of electricity and that it is perpetrated by poor people against a supposedly rich company. The Robin Hood syndrome!

That argument is an inadequate response to the fundamental issues at stake. For instance, with shareholder equity of around US$1 billion, the company’s US$9 million in profit last year represented return on investment of less than one per cent.

Moreover, in the past financial year, the company’s receivables, at 90 days or more, at US$64 million, were approximately six per cent of its operating revenue. Since other customers are unlikely to have been allowed to owe JPS for so long, we can assume that the debt is largely the Government’s, to which must be added the company’s enforced social-welfare expenditure in the form of electricity theft.

That’s not all. That overdue debt has not only cash-flow implications for JPS, but foreign-exchange risks, given that while the company’s income is in Jamaican dollars, the bulk of its expenditure is in foreign currency. Such risks are exacerbated by the company’s declining revenues, which would likely cause unease to the company’s bankers and impact its ability to borrow for new plant and equipment. JPS is hardly in robust health.

Illegal connections removed

Indeed, no company anywhere could be asked to forgo, or hand over as welfare, the value of nearly a fifth of its output. Few could survive. JPS has tried to combat the problem by having 200 employees, or about 15 per cent of its staff, dedicated to the anti-theft effort. Last year, it removed 197,000 illegal connections, approximately one-third of the amount of its registered customer base – from its system. These and other technological solutions have failed to beat the problem. And they won’t.

The solution is primarily political. Indeed, the seven communities against which the JPS has moved, in the capital’s western belt and St Catherine, like others where electricity theft is endemic, are mostly garrison communities, those zones of exclusion where our brand of politics breeds a sense of entitlement and impunity.

That perceived right to trespass on other people’s property can’t be solved by single companies taking civil action or proffering criminal charges. It demands a fundamental shift of political attitudes, combined with a resolute State, especially if the Government is serious about encouraging investment – local or foreign.

Jamaica Gleaner;

Electricity Government JPS News

How come?

May 13, 2014 Webmaster

OUR wants JPS to say why power being cut in some communities

How comes

THE Office of Utilities Regulation (OUR) has summoned Jamaica Public Service Company (JPS) officials to a meeting today as public anger grows over the company’s decision to cut the number of hours that power is provided to some communities in an effort to combat electricity theft.

The regulator said it requested the meeting after being alerted about the matter by its Consumer Affairs Unit, which received complaints from the public, as well as JPS’s own news release on the issue yesterday.

According to the JPS, it took the decision as part of a strategy to get more persons in communities where more than 70 per cent of the power is stolen to pay for the electricity they use, and reduce the overall cost to paying customers.

“The communities to be affected in the initial phase of this curtailment strategy are Jones Town, Seaward Drive, Trench Town, Denham Town, Rema, Maxfield Avenue, Central Village, and Spanish Town Road,” JPS said, adding that it “has been working with these communities for some time, with limited success, and continues to encourage illegal users to take immediate steps to have their service regularised”.

“We have tried everything to reduce electricity theft,” the JPS release quoted Gary Barrow, the company’s senior vice-president for energy delivery.

“Our efforts have included a combination of initiatives, such as the removal of illegal ‘throw up’ lines, account audits and meter investigations, arrests in collaboration with the police, community intervention, and the installation of costly technology solutions. The company also has more than 200 employees working to reduce losses,” Barrow said.

The company, which some years ago launched a compliance campaign with the tag line ‘How Come?’, explained that in 2013 it removed more than 197,000 illegal lines, carried out more than 113,000 account audits and meter investigations, and facilitated the arrest of more than 1,200 persons for electricity theft.

It also said that it has installed more 7,600 Residential Automated Metering Infrastructure meters, but most of the potential customers targeted have not signed up for legal service.

According to the power company, its efforts to serve paying customers in communities with high levels of theft continue to be hampered by extensive damage to its equipment and ongoing power outages caused by illegal connections.

“Customers also suffer significant damage to their appliances and equipment as a result of the system overload caused by illegal connections,” JPS said.

As such, the company said that it “will make an effort to provide electricity for not less than 12 hours per day, and will remain sensitive to the safety concerns of the residents”.

The firm added that it “was also making every effort to minimise the impact on businesses, hospitals, and schools in these communities”.

In a letter to the JPS yesterday, the OUR asked for “critical information, such as the number of paying residential and commercial customers in the affected areas, and the alleged level of damage done to JPS equipment as a result of electricity theft in these communities”.

The OUR said it was treating this issue with the highest priority, given the impact on legitimate customers in these communities.

Jamaica Observer;

Electricity Government LNG News

Paulwell seeks legal advice on possible challenge to OCG

May 6, 2014 Webmaster

ENERGY Minister Phillip Paulwell

ENERGY Minister Phillip Paulwell is seeking legal advice from the solicitor general with a view to taking Contractor General Dirk Harrison to court over his report on the bidding process to implement the 381-megawatt energy project, according to a well-placed source.

Consultations, the newspaper was informed, are already underway between the solicitor general and the embattled minister, who is fighting to clear not only his name, but to repair any reputational damage that occurred to the country with the Inter-American Development Bank (IDB) reversing its position to support the 381MW project as a result of the contractor general’s report.

The Jamaica Observer was, however, unable to reach Paulwell last night for a comment.

The basis on which the minister can seek judicial review of the contractor general report lies in the legal response of the Office of Utilities Regulation (OUR) to the Office of the Contractor General’s special investigation report, the source said.

The OUR legal response, posted on its website, contends that the OCG erred in using the Government of Jamaica guidelines for consultancy tenders during its probe, whereas it should have used guidelines for Works Tenders. This, the source contends, is a serious error in law.

The OUR legal response further contends that the OUR conducted two distinctly different processes: an informal exploratory process in which expressions of interest were received, followed by a formal legal tender.

The source said that Energy World International (EWl), the company that eventually emerged as the preferred bidder to undertake the project, received Cabinet approval to be included after the deadline of the informal preliminary process but well before the commencement of the formal tender.

The sources said these two facts provided the foundation to apply for judicial review.

The project is to be built with a mix of EWI equity and multilateral funding. The imprimatur of the IDB is key to receiving the go-ahead for that funding.

It was Harrison’s first major report since assuming office in 2013. The report was issued on the same day that he issued the long-awaited Richard Azan report. But this isn’t the first time in recent years that a Government minister will be taking the OCG to court.

Transport Minister Dr Omar Davies last year sought leave for judicial review of a decision by the contractor general to monitor an oversight body set up by the minister to advise on the award of contracts to a public body.

The minister, however, withdrew the challenge.

Jamaica Observer;

Electricity Government LNG News

Bicknell Reserves Comment On EWI

May 2, 2014 Webmaster

Chris Bicknell, CEO of Tank-Weld Group.

A second effort at firing up the natural gas project seemed headed to derailment at midweek, but the candidate that would benefit from the collapse is keeping silent on its own readiness to step in.

A licence was issued to Energy World International to build a 381 MW LNG-fired plant on April 14, but the company has failed to secure backing for the project from the Inter-American Development Bank (IDB), which indicated that it viewed the procurement process that selected EWI as flawed.

EWI missed the payment window for its performance bond of US$36.85m, which was due to the Office of Utilities Regulation on April 24, but said it had made the payment on Wednesday. The company previously paid US$7.37m as a bid bond on its US$737m project. It still needs to tie down financing for the full project.

The next candidate in line to do a deal with the OUR is Energise Jamaica, a consortium led by Tank Weld Group and Musson Jamaica.

“Our Energise group has decided not to comment at this time. We want to see how the government is going to play this out. So we have decided to wait on the Government’s next move in this process.” said Tank Weld CEO Chris Bicknell on Wednesday.

HIGHER PRICE

Energise’s bid would deliver electricity to the grid at a more expensive price, US$0.1827. EWI’s project is predicated on pricing of US$0.1288. The first candidate, which failed to pay over its bond and lost out on the deal, Azurest-Cambridge, had proposed to deliver power at US$0.1390.

The OUR said last October that Energise proposes to run its plant initially on heavy fuel oil at a price of US$0.2154 for one to two years after which it expects to switch to natural gas.

Technically, Azurest’s second bid option, a heavy-fuel oil plant, also beat out Energise’s natural gas price, but it’s unclear whether the OUR is obliged to offer the American company another shot at a deal. A request for clarification was unanswered up to press time.

Energise is yet to disclose its expected sourcing of natural gas and how it will finance its project. Bicknell declined to answer those questions Wednesday as the EWI issue continued to play itself out.

Energise said previously that it has mobilised equity backers willing to put up capital in excess of US$60 million, and that its project would lead to 25 per cent savings on electricity costs.

Energy Minister Phillip Paulwell made it clear on Tuesday that he was willing to go to the mat for EWI and would seek to sway the IDB’s decision to a yes on financing for the Hong Kong-based but Australian-connected firm.

The licence issued to EWI on April 14 was amended to remove a stipulation that the Energy Minister could take over the project during the construction phase if work on the plant had stopped for more than two days, but it maintains aspects of the ‘step-in’ or takeover provisions after the plant has been commissioned. These provisions allow the minister to acquire the plant if it is idle for more than 180 days but Jamaica would have to compensate EWI 75 per cent of the estimated present value of the business, based on its current and future cash flows projected out for 15 years.

The initial compensation in the April 4 version of the licence was 50 per cent.

How the OUR first ranked the LNG bids:

Rank Bidder Bid Price Fuel Type

1 Azurest-Cambridge 13.90 US c/kWh Natural gas

2 EWI 14.56 US c/kWhNatural gas

3 Azurest-Cambridge 16.35 US c/kWh Heavy fuel oil

4 Energise 18.27 US c/kWh Natural gas

5 Optimal 18.30 US c/kWh Natural gas

6 Energise 21.54 US c/kWh Heavy fuel oil

EWI later revised its price down to 12.88 US cents/kWh.

Jamaica Gleaner;

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