BY AVIA COLLINDER Business reporter collindera@jamaicaobserver.com

 

LNG is coming to Jamaica

 

New Fortress Energy, the company which has won the contract to supply the island’s sole power distributor the Jamaica Public Service Company (JPS) with LNG for substations in Bogue, Montego Bay and another to be developed in Old Harbour, St Catherine, said it buys supplies from sources worldwide.

The company has declined to comment whether its suppliers include Trafigura Beheer, from which the Jamaica Observer understands it has sought to make buys.

Meanwhile, the Electricity Sector Enterprise Team (ESET) has indicated to theBusiness Observer that it does not matter where in the world the gas comes from.

Trafigura is the world’s third-largest private oil and metals trader. That company is also seeking to grow its market for LNG supply globally.

 

However, in 2011 the Dutch company was involved in controversy for a $31-million political donation to the the People’s National Party administration, which was then the governing party.

The company continues to sell supplies through third-party deals to the local market, including spot purchases made by Petrojam.

Describing the surge in LNG demand as an “LNG revolution”, Trafigura says on its wesbite that it plans to double supplies sold year over year from base year 2013 when the company transported one metric tonne (mt) of LNG globally.

The company has three full-time traders based in Geneva supported by its US Natural Gas team in Houston, Texas, and a European Natural Gas team, working with 27 LNG regional offices in key export and import countries across the globe.

However, as to sales programmed for Jamaica, the company said it has no comment.

“We don’t comment on our day-to-day commercial arrangements,” Victoria Dix, media liaison for Trafigura said when asked to channel questions about the Caribbean market, including Jamaica.

Bloomberg describes Trafigura Beheer as the world’s current largest LNG trader, reporting at year end December 2015 that the commodity trader “boosted the amount of LNG handled to 4.2 million metric tonnes in the financial year ended September 30, from 1.7 million a year earlier following a doubling in volumes… that made it the world’s biggest independent LNG trader.”

A source close to New Fortress Energy told the Business Observer that it is normal for ships to swap cargo and there may have been spot purchases, but that there is, however, no long-term relationship with Trafigura.

 

More directly, the company, through a spokesperson, said it sources LNG from all over the world.

“In addition to supplying our own gas from the United States, New Fortress Energy sources gas from all over the world. As a matter of policy, we cannot comment further,” New Fortress said.

He stated that in relation to Bogue, “we’re making significant progress and are excited to provide natural gas to help further Jamaica’s clean energy transition. We’re in close coordination with JPS on the process and timeline”.

Chairman of ESET Dr Vincent Lawrence told the Business Observer on Monday that the source of LNG was immaterial.

“ESET is not aware of any trades, swaps or short-term source arrangements that New Fortress Energy may make in satisfying its contractual arrangements with JPS.

“NFE under its Gas Supply Agreement arrangements can supply gas from any origin. However, in ESET granting approval of the Gas Supply Agreement between JPS and NFE, in order to ensure security of supply, NFE had to demonstrate as to its long-term ownership of and access to gas from the United States including the ability to obtain any required export permits.”

Lawrence added, “The contractual arrangements are private and between two private companies,” further adding that “the GOJ is not a party to the contractual nor day to day delivery arrangements”.

The island is moving towards the majority use of LNG as fuel for energy, with the aim of reducing dependence on oil which is subject to price volatility.

To that end, JPS has retrofitted its 115MW gas turbine plant in Montego Bay from automotive diesel oil to dual fuel use. The conversion, it was projected, will result in an approximate 40 per cent fuel price reduction.

New Fortress has also secured the supply contract for the JPS’s planned 195MW plant in Old Harbour which is being razed and will be rebuilt and expanded.

Start-up of LNG use at the JPS Bogue plant is due to begin in August, when construction of fuel lines and storage facilities are expected to be completed.

New Fortress is also slated to construct an expandable 100MW, natural, gas-fired, cogeneration plant for alumina producer, Jamalco, replacing a previous plan for a coal-fired alternative

 

The Observer

‘Strange’

 

THE Jamaica Public Service (JPS) has expressed ‘surprise’ at Tuesday’s passing of a resolution by the Kingston and St Andrew Corporation that seeks to have Corporate Area residents pay for the repair and replacement of street lights.

According to the light and power company, a resolution of that nature warrants consultations with the company, as a number of issues would have to be resolved before any such change could be made.

“I find it strange that they would move a resolution without us doing the research and getting back to them. We don’t have an adversarial relationship, we are accessible to all the councillors, they have our cell numbers and we respond to all their complaints, including street lights,” Jennifer McKurdy, JPS parish manager for Kingston and St Andrew North, told the Jamaica Observer on Wednesday.

McKurdy said that both he and the manager for JPS Kingston and St Andrew South attended last week’s KSAC Roads and Works Committee meeting, and were asked if it would be possible for private citizens to fix their own street lights. She said that they had promised to research the issue and respond but, before they were able to do so, the resolution was passed.

Meanwhile, JPS communications boss Winsome Callum told the Observer Monday night that, currently, there is no restriction on people who live some distance away from the main, or where electricity is unavailable, to go into the JPS office and work out an arrangement.

The process is usually for a certified contractor to install a street light at their home or in their community, and have it passed by the JPS. The owner of the property then becomes responsible for the bills and the maintenance of that light. However, she said that private citizens being responsible for the service or repair of streets lights in areas for which the KSAC is responsible is a totally different matter, requiring intense discussions on how it can be approached.

The resolution is one of the most controversial to be passed by the current KSAC administration, led by Mayor Angela Brown Burke. It was opposed by minority Jamaica Labour Party (JLP) members of the council, as well as three People’s National Party (PNP) councillors who abstained from voting. The resolution was eventually passed by a 16-10 majority.

The Observer reported Tuesday that PNP councillor Ian Telfer (Hughenden) had tabled a motion in the Council, seeking to have the public contribute more to maintaining street lights by paying for the repairs.

This would be in addition to some $3.4 billion from recently increased property tax, which generates revenue the Government and the councils use to pay for the street lights and garbage collection. However, despite the heavy increase in property taxes in April, both services continue to suffer from underfunding.

In his motion, Telfer said that the KSAC has been having “major challenges” in keeping the street lights in the Corporate Area operational. He noted that some private citizens, on occasions, have paid for repairs and replaced defective lights with “lights of their own”, but that these were eventually removed by the JPS.

He admitted that neither the KSAC nor the JPS can allow private citizens to add street lights to the grid as this would create “greater problems of maintenance and accountability, in addition to increasing operational costs”, but insisted in his motion that the KSAC should “mandate” the JPS to accept payments from private citizens.

Telfer said that there were instances where citizens have paid to repair or replace street lights, but the JPS said that the practice is illegal.

JLP councillor Vernon McLeod (Havendale) said that the JPS should find cash flow “to fund its business if it wants to stay in business”.

“The KSAC should penalise the JPS, and don’t pay them if they don’t provide the service,” McLeod said.

Another JLP councillor, Duane Smith (Chancery Hall), said that the resolution would set a dangerous precedent, and could open the floodgates for citizens to be asked to pay for other public services for which they are already taxed.

“It is quite obvious that the councillor is trying to remove the burden and responsibility of maintaining the street lights from the KSAC, and placing them squarely on the shoulders of the public. And what is most unfortunate about it is that it seems to have the backing of members who should know better,” Smith said.

Councillor Delroy Williams (JLP, Seivright Gardens) said that support of the resolution would be a reward for negligence on the part of the JPS. He said the KSAC should move aggressively to get the JPS to carry out its responsibilities.

His PNP colleague, Councillor Karl Blake (Greenwich Town), who seconded the motion, said that it could not be illegal for citizens to help to secure their communities. But, PNP Councillor Eugene Kelly (Whitfield Town), who abstained, said that while the motion had a good intention, citizens were already paying property tax, out of which the JPS was paid by the KSAC for the street lights.

“The JPS is paid hundreds of millions of dollars for the street lights, and if they don’t meet their obligation they should be sued,” Kelly said.

Another PNP councillor, Kevin Taylor (Duhaney Park), who also abstained, said that if citizens were to pay for the repair of street lights, they should be able to have the payment deducted from their property tax.

Jamaica Observer;

‘Strange’

 

THE Jamaica Public Service (JPS) has expressed ‘surprise’ at Tuesday’s passing of a resolution by the Kingston and St Andrew Corporation that seeks to have Corporate Area residents pay for the repair and replacement of street lights.

According to the light and power company, a resolution of that nature warrants consultations with the company, as a number of issues would have to be resolved before any such change could be made.

“I find it strange that they would move a resolution without us doing the research and getting back to them. We don’t have an adversarial relationship, we are accessible to all the councillors, they have our cell numbers and we respond to all their complaints, including street lights,” Jennifer McKurdy, JPS parish manager for Kingston and St Andrew North, told the Jamaica Observer on Wednesday.

McKurdy said that both he and the manager for JPS Kingston and St Andrew South attended last week’s KSAC Roads and Works Committee meeting, and were asked if it would be possible for private citizens to fix their own street lights. She said that they had promised to research the issue and respond but, before they were able to do so, the resolution was passed.

Meanwhile, JPS communications boss Winsome Callum told the Observer Monday night that, currently, there is no restriction on people who live some distance away from the main, or where electricity is unavailable, to go into the JPS office and work out an arrangement.

The process is usually for a certified contractor to install a street light at their home or in their community, and have it passed by the JPS. The owner of the property then becomes responsible for the bills and the maintenance of that light. However, she said that private citizens being responsible for the service or repair of streets lights in areas for which the KSAC is responsible is a totally different matter, requiring intense discussions on how it can be approached.

The resolution is one of the most controversial to be passed by the current KSAC administration, led by Mayor Angela Brown Burke. It was opposed by minority Jamaica Labour Party (JLP) members of the council, as well as three People’s National Party (PNP) councillors who abstained from voting. The resolution was eventually passed by a 16-10 majority.

The Observer reported Tuesday that PNP councillor Ian Telfer (Hughenden) had tabled a motion in the Council, seeking to have the public contribute more to maintaining street lights by paying for the repairs.

This would be in addition to some $3.4 billion from recently increased property tax, which generates revenue the Government and the councils use to pay for the street lights and garbage collection. However, despite the heavy increase in property taxes in April, both services continue to suffer from underfunding.

In his motion, Telfer said that the KSAC has been having “major challenges” in keeping the street lights in the Corporate Area operational. He noted that some private citizens, on occasions, have paid for repairs and replaced defective lights with “lights of their own”, but that these were eventually removed by the JPS.

He admitted that neither the KSAC nor the JPS can allow private citizens to add street lights to the grid as this would create “greater problems of maintenance and accountability, in addition to increasing operational costs”, but insisted in his motion that the KSAC should “mandate” the JPS to accept payments from private citizens.

Telfer said that there were instances where citizens have paid to repair or replace street lights, but the JPS said that the practice is illegal.

JLP councillor Vernon McLeod (Havendale) said that the JPS should find cash flow “to fund its business if it wants to stay in business”.

“The KSAC should penalise the JPS, and don’t pay them if they don’t provide the service,” McLeod said.

Another JLP councillor, Duane Smith (Chancery Hall), said that the resolution would set a dangerous precedent, and could open the floodgates for citizens to be asked to pay for other public services for which they are already taxed.

“It is quite obvious that the councillor is trying to remove the burden and responsibility of maintaining the street lights from the KSAC, and placing them squarely on the shoulders of the public. And what is most unfortunate about it is that it seems to have the backing of members who should know better,” Smith said.

Councillor Delroy Williams (JLP, Seivright Gardens) said that support of the resolution would be a reward for negligence on the part of the JPS. He said the KSAC should move aggressively to get the JPS to carry out its responsibilities.

His PNP colleague, Councillor Karl Blake (Greenwich Town), who seconded the motion, said that it could not be illegal for citizens to help to secure their communities. But, PNP Councillor Eugene Kelly (Whitfield Town), who abstained, said that while the motion had a good intention, citizens were already paying property tax, out of which the JPS was paid by the KSAC for the street lights.

“The JPS is paid hundreds of millions of dollars for the street lights, and if they don’t meet their obligation they should be sued,” Kelly said.

Another PNP councillor, Kevin Taylor (Duhaney Park), who also abstained, said that if citizens were to pay for the repair of street lights, they should be able to have the payment deducted from their property tax.

Jamaica Observer;

Phillip Paulwell, Minister of Mining, Energy and ICT
Phillip Paulwell, Minister of Mining, Energy and ICT

 

Arthur Hall, Senior News Editor

After a decade of expensive flirting and the expenditure of some US$4 million, the Government has finally ended its attempt at introducing liquefied natural gas (LNG) as the solution to the country’s high electricity prices.

Energy Minister Phillip Paulwell last week blamed the unavailability of the supply of LNG at reasonable prices as the reason for the reversal of a decision which had found favour with successive administrations over the past decade.

“Last year, in the middle of all that we were doing, I went to Angola to try to find gas. I recently went to Nigeria. I have been trying to find gas that makes sense,” Paulwell told a Gleaner Editors’ Forum as he noted that the original source for the gas, Trinidad and Tobago, has now officially been abandoned.

“2010 with Exmar would have been the best time to pursue an LNG deal. At that time, the market situation was right, Exmar had a number of projects going so they could benefit from the volume.

“Since then, the price of LNG has gone up, largely due to the demand out of Asia,” said Paulwell as he noted that the price of LNG has more than doubled since the Exmar agreement was abandoned.

According to Paulwell, he always favoured coal over LNG and had made a recommendation to that effect to the Cabinet shortly before the People’s National Party was voted out of power in 2006.

Mullings favoured coal

Clive Mullings, who replaced Paulwell as energy minister in the Jamaica Labour Party administration, also favoured coal and is believed to have lost his place in the Bruce Golding-led Cabinet because he bucked his colleagues who agreed that LNG was the way forward.

With Paulwell now done with LNG, coal will be in the fuel mix but gas remains highly favoured as the main alternative source of energy for the Jamaica Public Service Company (JPS).

“I am not going CLG (compressed liquid gas) and I’m not going LNG,” Paulwell told the Gleaner editors even as he refused to say exactly what would be the option.

Instead, the energy minister said major discussions are slated for tomorrow which could determine how quickly Jamaican consumers will get cheaper electricity.

He said officials of the JPS, the major players in the bauxite industry, the Government and an international investor are to meet in Kingston in an attempt to iron out an agreement.

“If that agreement is reached, the natural gas project is on,” said Paulwell as he refused to provide any further details on what he described as sensitive negotiations which have been taking place over the last two months.

Close to recommendation

Paulwell declared that after all the discussions and negotiations which took place last year, he is close to being in a position to recommend a firm position to the Cabinet.

He said if there is no agreement out of tomorrow’s meeting, his backup plan will include the introduction of interim solutions of small generation facilities, including renewables while moving towards the introduction of coal.

“Coal won’t come for about four years, even though the Chinese have said they could bring it in two years,” said Paulwell who is adamant that the price of electricity to the Jamaican consumer must move to between 15 and 18 US cents per kilowatt-hour (c/kWh) instead of the present 40-41 US c/kWh

Paulwell had previously announced that the JPS would be introducing LNG at its soon-to-be constructed 360-megawatt plant in Old Harbour, St Catherine.

“The Government of Jamaica decided it was no longer going to be the procurer for gas and it put the ball back in the court of the company that received the licence but it did not mean we would be sitting ideally by, so we have been very engaged in the process,” said Paulwell.

While admitting that it will not be his call if the JPS accepts the gas project now on the table, Paulwell said he would be urging the parties to find common ground when they meet tomorrow as this could lead to lower electricity prices at the earliest time.

  • Paulwell’s 3-step plan for cheaper electricity

Energy Minister Phillip Paulwell is staking his political career on cutting the cost of electricity to Jamaicans by more than 50 per cent.

Last week, during a Gleaner forum, Paulwell listed the steps he plans to take to ensure that electricity from the Jamaica Public Service Company (JPS) becomes much cheaper over the next three to four years.

1. Fuel diversification

Plan:

Phillip Paulwell, Minister of Mining, Energy and ICT
Phillip Paulwell, Minister of Mining, Energy and ICT

 

Arthur Hall, Senior News Editor

After a decade of expensive flirting and the expenditure of some US$4 million, the Government has finally ended its attempt at introducing liquefied natural gas (LNG) as the solution to the country’s high electricity prices.

Energy Minister Phillip Paulwell last week blamed the unavailability of the supply of LNG at reasonable prices as the reason for the reversal of a decision which had found favour with successive administrations over the past decade.

“Last year, in the middle of all that we were doing, I went to Angola to try to find gas. I recently went to Nigeria. I have been trying to find gas that makes sense,” Paulwell told a Gleaner Editors’ Forum as he noted that the original source for the gas, Trinidad and Tobago, has now officially been abandoned.

“2010 with Exmar would have been the best time to pursue an LNG deal. At that time, the market situation was right, Exmar had a number of projects going so they could benefit from the volume.

“Since then, the price of LNG has gone up, largely due to the demand out of Asia,” said Paulwell as he noted that the price of LNG has more than doubled since the Exmar agreement was abandoned.

According to Paulwell, he always favoured coal over LNG and had made a recommendation to that effect to the Cabinet shortly before the People’s National Party was voted out of power in 2006.

Mullings favoured coal

Clive Mullings, who replaced Paulwell as energy minister in the Jamaica Labour Party administration, also favoured coal and is believed to have lost his place in the Bruce Golding-led Cabinet because he bucked his colleagues who agreed that LNG was the way forward.

With Paulwell now done with LNG, coal will be in the fuel mix but gas remains highly favoured as the main alternative source of energy for the Jamaica Public Service Company (JPS).

“I am not going CLG (compressed liquid gas) and I’m not going LNG,” Paulwell told the Gleaner editors even as he refused to say exactly what would be the option.

Instead, the energy minister said major discussions are slated for tomorrow which could determine how quickly Jamaican consumers will get cheaper electricity.

He said officials of the JPS, the major players in the bauxite industry, the Government and an international investor are to meet in Kingston in an attempt to iron out an agreement.

“If that agreement is reached, the natural gas project is on,” said Paulwell as he refused to provide any further details on what he described as sensitive negotiations which have been taking place over the last two months.

Close to recommendation

Paulwell declared that after all the discussions and negotiations which took place last year, he is close to being in a position to recommend a firm position to the Cabinet.

He said if there is no agreement out of tomorrow’s meeting, his backup plan will include the introduction of interim solutions of small generation facilities, including renewables while moving towards the introduction of coal.

“Coal won’t come for about four years, even though the Chinese have said they could bring it in two years,” said Paulwell who is adamant that the price of electricity to the Jamaican consumer must move to between 15 and 18 US cents per kilowatt-hour (c/kWh) instead of the present 40-41 US c/kWh

Paulwell had previously announced that the JPS would be introducing LNG at its soon-to-be constructed 360-megawatt plant in Old Harbour, St Catherine.

“The Government of Jamaica decided it was no longer going to be the procurer for gas and it put the ball back in the court of the company that received the licence but it did not mean we would be sitting ideally by, so we have been very engaged in the process,” said Paulwell.

While admitting that it will not be his call if the JPS accepts the gas project now on the table, Paulwell said he would be urging the parties to find common ground when they meet tomorrow as this could lead to lower electricity prices at the earliest time.

  • Paulwell’s 3-step plan for cheaper electricity

Energy Minister Phillip Paulwell is staking his political career on cutting the cost of electricity to Jamaicans by more than 50 per cent.

Last week, during a Gleaner forum, Paulwell listed the steps he plans to take to ensure that electricity from the Jamaica Public Service Company (JPS) becomes much cheaper over the next three to four years.

1. Fuel diversification

Plan:

George Davis, guest columnist

The energy minister, Phillip Paulwell, has taken a lot of stick from members of the advocacy group, Citizens United to Reduce Electricity (CURE), for the turn of events regarding the all-island licence granted to the Jamaica Public Service Company (JPS) by the People’s National Party (PNP) administration in 2001.

The criticism, including the claim that the minister has betrayed the Jamaican consumer by supporting his Government‘s decision to appeal the ruling, is fully merited. The minister, whose popularity was in the early part of its growth phase at the time, effectively ‘called down crosses’ upon himself by hailing the July 30 Supreme Court ruling of Justice Bryan Sykes as a major decision in his own bid to bring competition to the energy sector.

The lawyer for CURE, Hugh Wildman, is on record saying Minister Paulwell told him privately that the court ruling will allow him and his Government to break up the JPS monopoly on the transmission and distribution of electricity.

With that admission, Paulwell effectively cut his own tamarind switch and asked CURE to flog him senseless after the reasons for the Government’s decision to join the JPS in appealing the ruling were articulated in the House of Representatives by Attorney General Patrick Atkinson on November 6.

Gathering storm

But the wrath at Paulwell’s impression of a ‘two-side cutlass’ is threatening to relegate the real issues, concerning the court ruling, to the sidelines. Principal among those real issues is the fact that in reality, the landmark victory secured by CURE in the Supreme Court would create an unprecedented crisis in every atom of the Jamaican society.

If, as the court found, the JPS’s all-island licence was indeed invalid, and the decision should be enforced, what would happen to the company’s operations? At what point would the JPS turn off the lights, send its employees home, and call time on its business interest in Jamaica?

What would Portia Simpson Miller, her Government and the citizenry do when JPS, with justification, demanded the return of the billions of dollars invested in its business, on the premise of being a monopoly, since 2001?

How would Government deal with the fact that it now has to foot a massive bill for a licence that it granted to the utility provider to meet the country’s energy needs?

For anyone in the dark about why the attorney general was moved to advise the Government to appeal the ruling, I ask only that you think very carefully on these things.

We should agree that shutting down the sole transmitter and distributor of electricity won’t translate into lower light bills for us, the hard-up and long-suffering JPS customers. If such a ruling were handed down against a company similar to the JPS today in, say, England, where Wildman found a 1913 court ruling to strengthen his arguments in the court, I could understand and accept.

No competition here

But England today, with its 42 counties, has more than 70 companies which supply customers with electricity or a combination of electricity and gas. Shutting down one of so many providers simply allows the customer to call in npower or a Sainsbury’s Energy to supply their electricity needs. That, unfortunately, is not the reality in Jamaica.

In all this, one must sympathise with the members of CURE. Theirs is, and continues to be, a gallant effort to do something about the crippling cost of our residential and commercial electricity bills. Hugh Wildman is a ‘square-shooting

George Davis, guest columnist

The energy minister, Phillip Paulwell, has taken a lot of stick from members of the advocacy group, Citizens United to Reduce Electricity (CURE), for the turn of events regarding the all-island licence granted to the Jamaica Public Service Company (JPS) by the People’s National Party (PNP) administration in 2001.

The criticism, including the claim that the minister has betrayed the Jamaican consumer by supporting his Government‘s decision to appeal the ruling, is fully merited. The minister, whose popularity was in the early part of its growth phase at the time, effectively ‘called down crosses’ upon himself by hailing the July 30 Supreme Court ruling of Justice Bryan Sykes as a major decision in his own bid to bring competition to the energy sector.

The lawyer for CURE, Hugh Wildman, is on record saying Minister Paulwell told him privately that the court ruling will allow him and his Government to break up the JPS monopoly on the transmission and distribution of electricity.

With that admission, Paulwell effectively cut his own tamarind switch and asked CURE to flog him senseless after the reasons for the Government’s decision to join the JPS in appealing the ruling were articulated in the House of Representatives by Attorney General Patrick Atkinson on November 6.

Gathering storm

But the wrath at Paulwell’s impression of a ‘two-side cutlass’ is threatening to relegate the real issues, concerning the court ruling, to the sidelines. Principal among those real issues is the fact that in reality, the landmark victory secured by CURE in the Supreme Court would create an unprecedented crisis in every atom of the Jamaican society.

If, as the court found, the JPS’s all-island licence was indeed invalid, and the decision should be enforced, what would happen to the company’s operations? At what point would the JPS turn off the lights, send its employees home, and call time on its business interest in Jamaica?

What would Portia Simpson Miller, her Government and the citizenry do when JPS, with justification, demanded the return of the billions of dollars invested in its business, on the premise of being a monopoly, since 2001?

How would Government deal with the fact that it now has to foot a massive bill for a licence that it granted to the utility provider to meet the country’s energy needs?

For anyone in the dark about why the attorney general was moved to advise the Government to appeal the ruling, I ask only that you think very carefully on these things.

We should agree that shutting down the sole transmitter and distributor of electricity won’t translate into lower light bills for us, the hard-up and long-suffering JPS customers. If such a ruling were handed down against a company similar to the JPS today in, say, England, where Wildman found a 1913 court ruling to strengthen his arguments in the court, I could understand and accept.

No competition here

But England today, with its 42 counties, has more than 70 companies which supply customers with electricity or a combination of electricity and gas. Shutting down one of so many providers simply allows the customer to call in npower or a Sainsbury’s Energy to supply their electricity needs. That, unfortunately, is not the reality in Jamaica.

In all this, one must sympathise with the members of CURE. Theirs is, and continues to be, a gallant effort to do something about the crippling cost of our residential and commercial electricity bills. Hugh Wildman is a ‘square-shooting

Prime Minister Portia Simpson Miller and Energy Minister Phillip Paulwell.-file
Prime Minister Portia Simpson Miller and Energy Minister Phillip Paulwell.-file

Lower light bills not coming anytime soon

Arthur Hall, Senior News Editor

The Sunday Gleaner has now confirmed that the Portia Simpson Miller-led administration will announce plans to abandon its long-stated intention to introduce liquefied natural gas (LNG).

After years of planning and millions of dollars in expenditure, the Simpson Miller administration has decided that it just cannot afford the cost of setting up the infrastructure and other requirements for the introduction of LNG.

Energy Minister Phillip Paulwell is scheduled to make that announcement early next month, but government sources say a new plan could be announced at that time as Paulwell continues his desperate push to reduce electricity bills.

“I can say that the numbers are not adding up,” a government source told The Sunday Gleaner late last week.

“As you would have suspected, we knew this was a likely outcome for some time now and had begun to support the offtakers (electricity and alumina producers) to rev up plans ‘B’ and ‘C’, and they are so doing,” added the source who asked that his name be withheld.

It is expected that plans ‘B’ and ‘C’ would see the Jamaica Public Service Company (JPS) being allowed to establish the LNG infrastructure and source the gas for the multibillion-dollar plant it plans to construct in Old Harbour, St Catherine.

The JPS would also sell LNG to the alumina producers which have long argued that the high price of electricity in Jamaica makes production uncompetitive.

“We have long told the Government that the introduction of LNG should be private sector-driven, but the People’s National Party administration before it lost the 2007 general election was adamant that it should be state-controlled and the Bruce Golding-led Jamaica Labour Party government followed that path,” said a source in the energy sector last week.

“If this was a private sector-led drive, EXMAR would have started construction in 2009 and, by this year or early next year, the country would have LNG and lower electricity bills,” added the source who asked not to be named.

Last year, The Gleaner first reported that a November 2010 report by a World Bank-recommended team of consultants suggested that the Government put on hold its plan to introduce LNG.

uncertainty with project

At the time, the consultants stated that there was ambiguity and uncertainties surrounding several aspects of the project which could make it a financial disaster for the Government.

According to the consultants, a focused economic and financial feasibility study should be completed quickly before a final design specification for the Floating Storage and Regasification Unit and pipeline system.

The consultants also warned that the Government could be exposed to great financial risk for future gas purchase.

But then Energy Minister James Robertson and members of the LNG Steering Team scoffed at the consultants’ report as they responded to the queries.

“That (consultants’) assessment report raised several valid questions of the project, for which comprehensive answers were provided,” Robertson told The Gleaner at the time.

It’s one of the costliest crimes plaguing Jamaica, but few people recognise the scope and gravity of this parasitic add-on.

The Jamaica Public Service Company (JPS), the monopoly distributor of electricity across the island, lamented this past weekend that it has lost US$30 million to electricity theft so far this year, and spends another US$30 million annually on technology to curb the piracy. Combined, that represents the equivalent of J$5.4 billion that inflates the cost of power to Jamaican households and businesses teetering on the edge of survival.

“About 14 per cent of the electricity produced by JPS is stolen, and the cost of this theft is shared by both JPS and our customers,” says Kelly Tomblin, JPS’s president and CEO.

Of course, that’s not the whole story. Jamaica’s electricity costs are meteoric because of JPS’s outdated plants, which deliver energy inefficiently.

Energy cost, as this newspaper has repeatedly emphasised in these columns, is the most crucial factor behind the uncompetitiveness of the Jamaican economy. This handicap puts Jamaica at a severe disadvantage internationally and against regional neighbours such as Trinidad and Tobago, on which misplaced rage has been directed for its one-sided trade relationship, on which Jamaica is running a deficit of nearly US$1 billion on mostly oil imports.

Scores, if not hundreds, of businesses that have foundered name electricity cost to be among the main reasons, if not the primary one, for their collapse. Jamaica pays up to US$0.40 per kilowatt-hour for energy – JPS will be quick to remind that August’s rate was eight cents cheaper – six times that of Trinidad and Tobago.

Phillip Paulwell, the energy minister, has been a vigorous cheerleader for the dismantling of the monopoly, which he believes will drive down costs to consumers.

Mr Paulwell predicates his vision for a liberalised electricity sector on foreign investors indulging their appetite among a Jamaican population willing to give its hand to the suitor with the sweetest proposal. But Mr Paulwell’s romanticised notions seem to ignore the compelling reality that investors may not gamble money on Jamaica’s unreliable national security structure.

LAW AND ORDER ON HOLIDAY?

The maintenance of law and order is the fundamental role of government, the glue that holds society and the economy together. It is on that score that the Jamaican Government has been found wanting.

JPS, which has decades-old roots in the Jamaican economy, may be less minded to disengage because of the breadth of its capital investment, even if it has to spend an extra US$30 million a year. A new company, however, may be less inclined to yawn at such write-offs for crime.

Politicians of both the ruling People’s National Party and the opposition Jamaica Labour Party have generally winked at the problem of electricity theft. Most inner-city communities are cobwebbed with illegal connections. And unscrupulous business operators and wealthy suburban householders are big on the gig. The police do little to prevent it.

The numbers bear the tale. According to JPS, “Since the start of the year, 38 persons have been arrested for illegal abstraction of electricity, over 5,700 meter irregularities have been discovered, and 14,000 illegal ‘throw-up’ lines removed across the island.” But that’s a drop in the bucket.

Government had better get serious about electricity theft. Or its overtures to investors might be equated with wooing a lover without the vow of protection.

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.

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It was National Hero Norman Washington Manley who said that the mission of his generation was to achieve political independence. He further said that the mission of the next generation would be to achieve economic independence. But economic independence is clearly a harder task to achieve than political independence. And a main ingredient in the achievement of economic independence is in having independence in electricity.

In the days before the world oil crisis which began in December 1973, independence in electricity was not an issue as oil was cheap. But since that time there has been talk of having alternative sources of energy because of increasingly higher prices. The oil-producing countries then played their underselling game and Jamaica dropped its plans of creating alternative energy because of temporarily cheaper oil prices that sky-rocketed to very higher prices once the alternative energy plans were dropped.

In the 1990s the government of the day decided that our light and power company, the Jamaica Public Service, would be best divested to private people. Government could not manage JPS in such a way that there were not constant power cuts caused by breakdowns of the generators. But private owners are only interested in profit, which is one reason for higher prices. Another reason is the rising prices caused by the US Gulf War. From the 1990s the JPS has been using a certain amount of windmill energy. Then came 9/11 in 2001. The United States of America needed alternative sources of energy to fight their war in the Middle East as the oil available was not enough.

In any case, the available oil was being used by both sides of the war to fuel war planes and whatever else. As a result of all this, oil supplies dwindled and as a consequence oil prices went up. This has brought to the fore once again the argument for greater use of alternative energy, and more important its actual implementation to some extent. It is true that we may be stuck with JPS for many more years as suggested by the headline of Mark Wignall’s column on August 16.

But it does appear that despite all the obstacles listed in Wignall’s column, independence in electricity is slowly but surely coming. Already it is being done by using solar, windmill or a combination of both without going through the red tape, trauma and rigmarole and whatever other delays of attempting to share the grid with JPS. Indeed, solar panels on roofs of houses are becoming very common. Is it the JPS that has gone into solar energy with the street lights on the Highway leading into Portmore, St Catherine, or is it the foreign contractors? Incidentally, JPS also has some hydro-electric power plants and has always had them.

My interest in solar, hydro and windmill is partly out of concern for our political and economic independence and partly subjective. I am an asthmatic and am affected by the smoke from oil generators and also from coal energy – which is being marketed as safe for health due to improved technology, but I am not convinced. I am not really in favour of any source of energy that requires burning for its effectiveness.

And I am aware that in Jamaica, just about everyone has a relative who is asthmatic if they do not themselves suffer from the condition. In other words, “is nuff a wi”.

That aside, both coal and Liquid Natural Gas would be imported, if we went that route. So imported cheap coal as well as cheap LNG would lead to a similar dependence on outside supplies leading to the spending of precious foreign exchange.

I believe that coal and LNG are now cheap because the owners of such commodities are attracting buyers. But both might become expensive if we are put in a position where we cannot do without it because we have nothing else. Indeed, I believe that it is the age-old game of undersell, put the competitor out of business and then jack up the price afterwards.

But to politicians, cheaper electricity translates into more votes at election time. Energy minister Phillip Paulwell promotes cheaper energy, even if it is more hazardous and even if it encourages dependency. But has anyone in the People’s National Party guessed that by the time election comes around the cheap coal and cheap LNG may skyrocket to the point where the voters swing away from the PNP? Or is there a plan by Prime Minister Portia Simpson Miller to call a snap election the minute the electricity prices fall?

Our aim should be to avoid any form of energy that increases dependency and detrimental to health. We should instead be looking towards complete independence in electricity, even if the capital outlay in its initial years is costly, especially with regard to solar energy. And with all the hurdles listed by Mark Wignall, the quicker we move on this the better. To our credit, we have started already.

ekrubm765@yahoo.com

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