Plans for the liberalisation of
Petrojam has projected that consumers could see a slight ease in pumps prices for the current fiscal year.
The refinery which is majority owned by the government, in its forecast for the 2012/2013 fiscal year says while it expects prices to remain strong in spite of continuing economic uncertainties, the average selling prices could fall about 3 percent.
Petrojam did not say how it expects the reduction in oil prices to affect prices at the pumps.
However since the start of the year pump prices have moved up by about 8 percent.
http://rjrnewsonline.com/business/petrojam-projects-slight-dip-petrol-prices
JUST over one week ago, new Jamaica Public Service CEO Mrs Kelly Tomblin, having spent just over a month listening to the various stakeholders in JPS, particularly its customers and employees, revealed to the Observer Monday Exchange that she had never seen an electricity company facing such a difficult and complex set of challenges.
This was despite the fact that in her group she is normally brought in to deal with difficult situations requiring some form of turnaround. Indeed, many years ago, her first job in the electricity industry was at the infamous Three Mile Island nuclear plant in the United States, the scene of a near meltdown, and now part of the literature on how not to handle a crisis.
Mrs Tomblin was, of course, saying no more than the truth. In addition to facing legal challenges concerning some of its practices, such as back-billing, and its licence (the latter reflecting the overall legal and regulatory risk the company is facing), JPS has lost the trust of its customers, and even, Mrs Tomblin suggested, its employees.
One example of the former is that a group of Jamaica’s largest, most influential, progressive and innovative companies came together to publicly demand electricity competition. More generally, every householder and business in Jamaica, both rich and small, awaits with trepidation the monthly arrival of their electricity bill, over which many feel they have no control. Even JPS shareholders are clearly not happy with the many changes of ownership in just over a decade.
Despite the view of the man in the street that JPS is rapacious, a US$34-million profit on US$1.2 billion in sales is not particularly high, and could even be described as inadequate, given routine capital expenditure of US$40 million to US$50 million, and particularly against the huge increase in investment required over the next few years.
On the positive side, JPS shareholders have, according to Mrs Tomblin, the long-term view required to make the new investments. The decision to move ahead with the new LNG-powered electricity plant means the long-delayed decision on Jamaica’s future fuel source appears to have finally been made.
When Liquefied Natural Gas (LNG) was originally mooted as Jamaica’s preferred fuel source over coal, there were legitimate concerns over the paucity of suppliers, particularly without a guaranteed supply from our Caricom partner Trinidad. However, the huge increase in the production of shale gas has collapsed natural gas prices in the United States, which now appears poised to become a major world supplier of gas.
In Japan and South Korea, the respective home bases for the current owners of JPS, all natural gas supplied for electricity generation comes through their own LNG terminals, suggesting they will have readily transferable expertise available to Jamaica in this still emerging area.
The starting point to rebuilding trust in JPS will be for Mrs Tomblin to continue to listen to the emotional pain of her customers, and empower her front line employees, all of whom know very well what is going on.
Mrs Tomblin appears to understand that, when in pain, neither customers nor her employees will care about the needs of JPS until it is clear that the business cares about them. Her current posture of emphasising listening, observing and acknowledging, rather than trying to explain or rationalise, reflects a necessary emotional intelligence that appeared to be missing from former top management.
She is off to a good start.
Read more:
JPS power station in Bogue, Montego Bay. Contributed
The following is a response to the article, ‘Combustion turbines or diesel engines? Choosing the right technology for lowering fuel costs’ by Val Fagan, published in
THE Jamaica Public Service (JPS) has reiterated that Liquefied Natural Gas (LNG) is the preferred option as Jamaica explores alternatives to electricity generation fuelled by oil.
Valentine Fagan, the managing director of South Jamaica Power Company, made the pronouncement while addressing the weekly Jamaica Observer Monday Exchange. That company was set up by the JPS to preside over the construction of a 360-megawatt plant in Old Harbour, St Catherine. According to JPS, that facility, which is slated to come on stream in December 2014, will replace the inefficient and aged Old Harbour power-generating plant.
“There is really not much difference in terms of coal versus LNG, just that it is possible to bring on the LNG plant much faster. Coal plants take five years for construction, in addition to the many environmental issues,” said Fagan as he addressed reporters and editors at the Observer’s Beechwood Avenue headquarters.
“If we don’t add capacity, and if we assume modest growth in the economy, we would have breached the 25 per cent reserve margin, and would find it difficult to supply peak demand. This would result in widespread outages,” Fagan added.
For several months, some stakeholders in the energy sector have been questioning moves by the JPS and the Government to introduce LNG. Some of the observers have suggested that coal would be a less-expensive option. Others have suggested that LNG prices will begin to skyrocket, and have also indicated that Jamaica
THE Office of Utilities Regulations (OUR) has so far received 10 applications for licences from producers of electricity from renewable sources to engage in net billing thus paving the way for them to be paid for selling power to the national grid, energy minister Phillip Paulwell said last week.
Paulwell said the entities would be visited by the Jamaica Public Service Company (JPS) this week for the installation of new meters to measure the energy going to the grid, after which the OUR would recommend to him those which are to get licences in about two weeks.
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PAULWELL
A dramatic rise in the oil bill alongside flat tourism inflows caused Jamaica’s current account deficit to more than double last year. The trade gap with overseas partners also yawned wider at the end of 2011, with imports of goods valued at US$5.9 billion outpacing goods exports of US$1.7 billion by 256 per cent or US$4.26 billion. Balance of payments (BOP) data released by the Bank of Jamaica (BOJ) indicate that the current account deficit worsened to US$2.07 billion, compared to US$934 million in 2010. “In particular, mineral fuel imports expanded by US$856.3 million, partly reflecting a 19.6 per cent increase in the average price of oil for the period,” said the BOJ in its December 2011 BOP report. The spike in the oil bill also wiped out gains in the bauxite sector. The services sector, which includes transport and travel, was hurt by increased sea freight charges amid narrow movement in inflows from tourism, which inched up 1.3 per cent to US$1.8 billion. Some positive signs Private remittances also recovered slightly by US$106 million to US$1.92 billion, while total remittances were reported at US$2.04 billion. Improved earnings from crude materials
RED Stripe is currently evaluating the possibility of establishing a cogeneration plant at its Spanish Town Road brewery, making the beer company the first in the Caribbean to have such a facility. Cogeneration plants became popular in the 1980s as the most efficient system of generating electricity and producing heat. Unlike the cogeneration system, a typical central station utility plant sees 35 per cent of the energy generated by burning fuel to produce electric power, but 40 to 45 per cent is rejected as “waste” or by-product heat, which is normally dumped. Also, another 20 per cent tends to get lost up the smokestack of the boiler.
Ever since oil prices soared in the 1970s, it became imperative for businesses worldwide to find technological solutions to contain rising energy costs, especially in manufacturing industries where typically raw materials comprise of as much as 50 per cent of total costs. Red Stripe, which was acquired by British drinks giant Diageo, has had to carefully manage its input costs in Jamaica against the background of a contracting ecconomy characterised by a drop in aggregate demand. Supply Director for Red Stripe, Cedric Blair, said the company had long recognised the benefits to be derived from cogeneration, which is the simultaneous production of electricity and heat. With that system, the heat that may otherwise be wasted in the production of electricity is captured and utilised to produce steam, which may be used for both industrial and domestic purposes. Utilisation of waste heat in this way also reduces the requirement for cooling water supplies for power generation and eliminates the need for structures such as the cooling towers that dominate the skyline in a conventional power plant. With a firm focus on reducing energy costs, Red Stripe is contemplating installing a 3 – 5 MW plant at a cost of between US$5 to $7 million with a payback of just 2 to 3 years. Blair said the time frame for completion is 12 months from contract. “We have to find ways in which we can lower our energy costs, which is close to 12 to 15 per cent of the cost of production,” declared Blair, pointing out that the costs of energy in Trinidad and Tobago is US 5 cents per kWh while it costs Jamaicans close to US40 cents per kwh. He recalled that “in 2005 we were paying 11 to 13 US cents per kWh now it’s 34 to 35 cents US per kWh.” The high cost of energy, a major input for manufacturers, has not escaped the attention of several local trade bodies including the Jamaica Exporters Association. They continue to lament the wide disparity between energy costs in Jamaica as opposed to what prevails in its fellow Caricom member Trinidad and Tobago. While cogeneration plants can be effectively used by hotels and industrial production facilities, Blair contends “it is perfect for breweries and can bring many benefits. For instance, it can produce electricity 70 to 80 per cent more efficiently and will cost 11 cents US per kWh… it will provide us with steam and water for cooling our offices.” Several businesses and insitutions across the world have installed cogeneration plants and are reporting positive results. Assistant Vice- President for Sustainability and Technical Services at New York University, John Bradley, is reported to have said, “Cogeneration in and of itself is a much more efficient process; the cogen plant is really the hub of our sustainability and energy efficient delivery of utilities to the university for the next 40 years.” So where is Red Stripe looking to source this most strategic asset. “We are looking at Europe, America… we are talking to a number of reputable companies. We have shortlisted three who are capable of designing and building the plant,” Blair said, adding, “we are finalising design and structure”. In terms of the primary source of fuel for the plant, he said it could be natural gas, diesel or heavy fuel (bunker seed). Some cogeneration plants need as much as four acres of land, and Blair said Red Stripe has ample land space to accommodate such a large plant. As far as the environmental benefits are concerned, Blair believes that LNG is the best option. He cited a reduction in carbon dioxide emission into the atmosphere as a positive benefit from the cogeneration plant. He went on to say that when operational, it will undergo performance tests to determine the power output and plant heat rate. Read more:
DESPITE the possibility of the Supreme Court revoking the Jamaica Public Service |