KINGSTON, Jamaica –
Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell, says the Government firmly believes that it is the private sector that should drive investment in energy projects.
He said the duty of the state is to create the enabling environment for investment and then for regulating that environment to ensure that the rules are fair and that everyone observes them.
“We have taken the important step in creating the legislative environment. We now need to improve on the bureaucracy of our regulatory environment because we need those investments to bring in jobs and we need to reduce our crippling oil bill,” he stated.
The Minister was speaking at a stakeholder workshop yesterday (Oct. 9) at the PCJ Auditorium in New Kingston, for the design of a streamlined process for private sector investment in renewable energy projects, particularly hydropower projects.
Jamaica‘s renewable energy market is fully liberalised and open to competition, following the Senate voting unanimously on Friday (Oct. 5), to approve the Extension of Functions Amendment Order, removing the Petroleum Corporation of Jamaica‘s (PCJ) exclusive right to exploit and develop renewable resources to Jamaica. The move followed similar action by the House of Representatives the previous week.
The Minister said the move “is in keeping with the goals of our national energy policy, which calls for a modern, efficient, diversified and environmentally sustainable energy sector providing affordable and accessible energy supplies.”
More than 14 government ministries and agencies with responsibility for regulating and legislating various components of the hydropower developmental process, are participating in the training workshop, which is being held over two days.
Noting the importance of the training, Minister Paulwell said the process for approvals, permitting and licensing for small hydro development is “extremely time consuming” as various agencies need to be consulted.
“Right now, Jamaica needs a local approvals process which is time sensitive with clear indications as to how long the entire process will take cognisant, of course, of fitting into the overall time frame of the complete business process. We need a local approval process, which is interactive… transparent so that investors know how many steps are included and which ones to take,” he said.
The training is being delivered by experts from the United States Federal Energy Regulatory Commission (US FERC), and will address issues including, energy infrastructure siting, laws and regulations, licensing processes and interagency interactions. FERC will provide advice based on their experience regulating the hydropower sector in the USA.
The Government has received financing from the International Bank for Reconstruction and Development towards the cost of the Energy Security and Efficiency Enhancement Project.
Read more:
Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell, says the Government firmly believes that it is the private sector that should drive investment in energy projects.
He said the duty of the state is to create the enabling environment for investment and then for regulating that environment to ensure that the rules are fair and that everyone observes them.
“We have taken the important step in creating the legislative environment. We now need to improve on the bureaucracy of our regulatory environment because we need those investments to bring in jobs and we need to reduce our crippling oil bill,” he stated.
The Minister was speaking at a stakeholder workshop yesterday (Oct. 9) at the PCJ Auditorium in New Kingston, for the design of a streamlined process for private sector investment in renewable energy projects, particularly hydropower projects.
Jamaica‘s renewable energy market is fully liberalised and open to competition, following the Senate voting unanimously on Friday (Oct. 5), to approve the Extension of Functions Amendment Order, removing the Petroleum Corporation of Jamaica‘s (PCJ) exclusive right to exploit and develop renewable resources to Jamaica. The move followed similar action by the House of Representatives the previous week.
The Minister said the move “is in keeping with the goals of our national energy policy, which calls for a modern, efficient, diversified and environmentally sustainable energy sector providing affordable and accessible energy supplies.”
More than 14 government ministries and agencies with responsibility for regulating and legislating various components of the hydropower developmental process, are participating in the training workshop, which is being held over two days.
Noting the importance of the training, Minister Paulwell said the process for approvals, permitting and licensing for small hydro development is “extremely time consuming” as various agencies need to be consulted.
“Right now, Jamaica needs a local approvals process which is time sensitive with clear indications as to how long the entire process will take cognisant, of course, of fitting into the overall time frame of the complete business process. We need a local approval process, which is interactive… transparent so that investors know how many steps are included and which ones to take,” he said.
The training is being delivered by experts from the United States Federal Energy Regulatory Commission (US FERC), and will address issues including, energy infrastructure siting, laws and regulations, licensing processes and interagency interactions. FERC will provide advice based on their experience regulating the hydropower sector in the USA.
The Government has received financing from the International Bank for Reconstruction and Development towards the cost of the Energy Security and Efficiency Enhancement Project.
Read more:
FOLLOWING THE revocation of an exploration licence, which was granted to Rainville Energy Corp, a subsidiary of Sagres Energy, to drill for oil, Energy Minister Phillip Paulwell has signalled that another company that was granted a licence could have it cancelled if they don’t begin drilling soon.
The Petroleum Corporation of Jamaica yesterday said the failure of Rainville to meet its financial obligations has resulted in the revocation.
Under the agreement, which dates back to 2006, Rainville should have secured the necessary funding for the second phase of the programme which began in May 2012.
Among other things, this phase involved the drilling of an exploratory well by November 2013.
Paulwell told
THE Petroleum Corporation of Jamaica (PCJ) has pulled oil exploration rights from Rainville Energy.
The Canadian outfit’s licence was revoked due to its failure to meet its financial obligations.
Tyrone Reid, Sunday Gleaner Reporter
A comprehensive operations audit of Jamaica’s state-owned oil refinery has questioned the legality and financial oversight of several mega contracts totalling hundreds of millions of US dollars per annum that are being entered into by Petrojam officials.
This is among a number of concerns contained in a “strictly confidential” report prepared by Centennial Group, a consulting firm from Washington, DC, which conducted a special operations audit of Petrojam Limited at the request of Finance Minister Audley Shaw.
The inspection was spawned by a massive $7.3 billion loss incurred by the company in the 2009 financial year.
The consultants, who stated that Petrojam could have substantially reduced its losses during a particular four-month period when the refinery was operating at high negative margins by increasing its reliance on imports to meet local demand, determined that several critical issues in the petroleum sector were too murky for comfort.
“High-value contracts for purchase of crude oil and petroleum products amounting to hundreds of millions of US dollars annually are being negotiated by a few Petrojam officials without any external oversight. Delegation of such responsibility needs to be established more carefully with proper oversight for better transparency,” the consultants said.
No authority to sign
The report also stated: “The legality of some contracts seems questionable with the system of delegation of financial authority being not clear. Amendments and/or renewals of some very high-value contracts have been done by some officers who may not have the required financial authority to sign these contracts.”
The consultants recommended that “a competent and authorised team of strong negotiators with skills in the oil trade with GOJ representation in the team should carry out these negotiations”.
“This will get the best possible terms for the country and would ensure adequate transparency in the deals. Further, in cases where petroleum products are imported without competitive bidding, as in the case of imports from Petrotrin, increased oversight is necessary by the Ministry of Energy and Mining, PCJ and Petroleos de Venezuela (PDVSA),” the report stated.
Commenting on the report, Winston Watson, general manager of Petrojam Limited, insisted that no unauthorised personnel signed a contract on behalf of the company. “I haven’t seen any document to substantiate that,” he told The Sunday Gleaner. In an earlier response issued by Petrojam on Friday, the company said it had an internal governance policy that was detailed in its chart of accounts with signing authority and delegation clearly identified.
“This chart of account has been approved by the board of directors and is strictly adhered to. At no point in the audit did the Centennial team request documentation on proof of signing authority; nor is Petrojam aware of any particular contract, the legality of which could be in any doubt by virtue of its signatory,” the Petrojam statement said.
The consultants also pointed out that the freight rates for product imports were unusually negotiated based on Petrojam’s own assessment. “This lacks transparency and evaluation of freight rates should be based on international benchmark rates published by Worlds Scale and AFRA ,” the consultants stated. AFRA, the average freight rate assessment, is one of the methods used to determine crude-oil freight rates.
In addition to those issues, the consultants highlighted that the demurrage – the charge for detention in port of a vessel by the ship owner beyond the time allowed or agreed upon – paid by Petrojam for vessels bringing in petroleum products appears to be excessive, running into millions of US dollars.
“Although Petrojam’s explana-tion is that high demurrage is the result of the limited capacity of the terminal, the dock occupancy was only 78 per cent in 2006, 83 per cent in 2008 and 80 per cent in 2009 up to July. In this context, it is worth mentioning that in some countries there have been many instances of collusion of port personnel with vessel owners for collecting extra demurrage,” the report stated.
Important issue
To further clean up the abysmal state of affairs in the country’s petroleum sector, Petrojam can no longer appear to be operating as a law unto itself, Centennial Group, the US-based audit consultants, has warned the Government.
“One important issue for the Government to resolve is that currently Petrojam is functioning virtually without effective oversight by either PCJ or the Ministry of Energy and Mining.
“There is need to develop this capacity with competent personnel who have knowledge of the petroleum sector. The Government also has to develop a satisfactory regulatory framework for the sector. At present, Petrojam serves as a quasi-regulator,” the consultants stated.
The consultants recommended that Petrojam, a joint-venture company with 49 per cent shares held by a foreign company – Petro Caribe S.A., an affiliate of
Tyrone Reid, Sunday Gleaner Reporter A comprehensive operations audit of Jamaica’s state-owned oil refinery has questioned the legality and financial oversight of several mega contracts totalling hundreds of millions of US dollars per annum that are being entered into by Petrojam officials. This is among a number of concerns contained in a “strictly confidential” report prepared by Centennial Group, a consulting firm from Washington, DC, which conducted a special operations audit of Petrojam Limited at the request of Finance Minister Audley Shaw. The inspection was spawned by a massive $7.3 billion loss incurred by the company in the 2009 financial year. The consultants, who stated that Petrojam could have substantially reduced its losses during a particular four-month period when the refinery was operating at high negative margins by increasing its reliance on imports to meet local demand, determined that several critical issues in the petroleum sector were too murky for comfort. “High-value contracts for purchase of crude oil and petroleum products amounting to hundreds of millions of US dollars annually are being negotiated by a few Petrojam officials without any external oversight. Delegation of such responsibility needs to be established more carefully with proper oversight for better transparency,” the consultants said. No authority to sign The report also stated: “The legality of some contracts seems questionable with the system of delegation of financial authority being not clear. Amendments and/or renewals of some very high-value contracts have been done by some officers who may not have the required financial authority to sign these contracts.” The consultants recommended that “a competent and authorised team of strong negotiators with skills in the oil trade with GOJ representation in the team should carry out these negotiations”. “This will get the best possible terms for the country and would ensure adequate transparency in the deals. Further, in cases where petroleum products are imported without competitive bidding, as in the case of imports from Petrotrin, increased oversight is necessary by the Ministry of Energy and Mining, PCJ and Petroleos de Venezuela (PDVSA),” the report stated. Commenting on the report, Winston Watson, general manager of Petrojam Limited, insisted that no unauthorised personnel signed a contract on behalf of the company. “I haven’t seen any document to substantiate that,” he told The Sunday Gleaner. In an earlier response issued by Petrojam on Friday, the company said it had an internal governance policy that was detailed in its chart of accounts with signing authority and delegation clearly identified. “This chart of account has been approved by the board of directors and is strictly adhered to. At no point in the audit did the Centennial team request documentation on proof of signing authority; nor is Petrojam aware of any particular contract, the legality of which could be in any doubt by virtue of its signatory,” the Petrojam statement said. The consultants also pointed out that the freight rates for product imports were unusually negotiated based on Petrojam’s own assessment. “This lacks transparency and evaluation of freight rates should be based on international benchmark rates published by Worlds Scale and AFRA ,” the consultants stated. AFRA, the average freight rate assessment, is one of the methods used to determine crude-oil freight rates. In addition to those issues, the consultants highlighted that the demurrage – the charge for detention in port of a vessel by the ship owner beyond the time allowed or agreed upon – paid by Petrojam for vessels bringing in petroleum products appears to be excessive, running into millions of US dollars. “Although Petrojam’s explana-tion is that high demurrage is the result of the limited capacity of the terminal, the dock occupancy was only 78 per cent in 2006, 83 per cent in 2008 and 80 per cent in 2009 up to July. In this context, it is worth mentioning that in some countries there have been many instances of collusion of port personnel with vessel owners for collecting extra demurrage,” the report stated. Important issue To further clean up the abysmal state of affairs in the country’s petroleum sector, Petrojam can no longer appear to be operating as a law unto itself, Centennial Group, the US-based audit consultants, has warned the Government. “One important issue for the Government to resolve is that currently Petrojam is functioning virtually without effective oversight by either PCJ or the Ministry of Energy and Mining. “There is need to develop this capacity with competent personnel who have knowledge of the petroleum sector. The Government also has to develop a satisfactory regulatory framework for the sector. At present, Petrojam serves as a quasi-regulator,” the consultants stated. The consultants recommended that Petrojam, a joint-venture company with 49 per cent shares held by a foreign company – Petro Caribe S.A., an affiliate of
JAMAICA is blessed to be refreshed and cooled all year by winds mostly coming in from the Caribbean Sea. Yet we make virtually no use of the potential for wind generated energy. Today, Jamaica gets 95 per cent of its energy from imported oil and 0.1 per cent from wind. Wind-generated energy accounts for less than charcoal and fuel-wood, which account respectively for 0.6 per cent and 1.9 per cent. Solar energy our most abundant and inexhaustible energy source provides mostly hot water in some hotels, hospitals and private homes. Solar energy helps in a small way to save on electricity and imported oil. This is almost exactly where the country was when the first oil crisis of the early 1970s tripled the bill for imported oil in a one-year period, terminating the economic growth of the 1960s and igniting the implosion of the Jamaican economy from which it has never recovered. The need to finance the oil import bill which kept escalating with each rapacious increase by the merciless oil producers is the root cause of our external debt. Given the dependence on oil and the cost to the economy it was reasonable to expect all the Governments since the mid 1970s to make reducing dependence on oil a priority. If diversification from oil to alternative energy sources was a priority, nothing meaningful has been done about it. We contend that the objective of developing alternative energy sources has never been seriously and consistently pursued. The explanation for this manifest failure lies in the willingness for self-delusion by means of hoped-for panaceas. The first panacea was that there is oil and/or gas in the offshore waters of Jamaica. This figment of optimistic geologists has made the rounds several times. Next panacea was coal, which is plentiful and relatively cheap from many sources across the world. This has been mooted ad nauseam with a different proposed supplier each time ranging from Colombia to China. The latest miracle solution is LNG which members of the Portia Simpson Miller Administration seem disagree on in their public statements. While we are waiting to get to the long Promised Land, Jamaica must move aggressively on two alternative sources of energy which are local and inexhaustible. These are solar and wind; with the former as a means of saving on imported oil and the latter as a means of reducing dependence on oil and reducing the cost of generating electricity. No one disagrees that lower electricity costs would be good for consumers, producers and exporters. To date, Jamaica has developed only one of several coastal sites suitable for wind-generated energy. This successful Wigton Windfarm is a wholly-owned subsidiary of the Petroleum Corporation of Jamaica located in Manchester, a parish with two other suitable but undeveloped sites. We suggested that the Members of Parliament give up generating hot air in Gordon House and take a trip in a single bus (avoid 63 SUVs making the trip), tour the Wigton Windfarm and learn what the cool breeze of the Caribbean can do. If they understand the benefits of wind we will, hopefully, have less hot air on energy, less energy devoted to ventilating and more energy put into implementation. Jamaica is a land with limited wood and water, but it is a land of unlimited wind and sun. The cool breeze and the warm sun are not just there for tourists.
Read more: Chad Bryan, Gleaner Writer As the current exchange between the Petroleum Corporation of Jamaica (Petrojam) and the Micro, Small and Medium-Sized Enterprise (MSME) Alliance continues, fuel prices keep going up. The MSME is the latest organisation to complain publicly about high gas prices. MSME member and Jamaica Solar Energy Association President Roger Chang, is asking that Petrojam make its pricing mechanism public. Rising gas prices are a consistent feature of Jamaica, in the past punctuated by riots as government taxes caused a sudden spike, which aroused public ire. One of those riots was in January 1979 when, under the Michael Manley-led People’s National Party (PNP) government, fuel prices increased from $3 to $3.20 a gallon for premium gasolene and from $2.85 to $ 3.10 a gallon for regular. In January 1985, yet another year started with increased fuel prices ande riots, this time under the Edward Seaga-led Jamaica Labour Party (JLP) government. Five people were killed in the violence that ensued after a $1.91 increase, prices moving from $8.99 a gallon to $10.90 a gallon for premium gasolene. In April 1999, with the PNP back in control under the leadership of PJ Patterson, demonstrators took to the streets to protest a hike in fuel tax from $1.55 a gallon to $2. On Friday, Petrojam’s website listed E10 (87) gasolene at $107.5228 and E10 (90) at $109.1787, prices to which dealers would add their margins. The increase in fuel prices is an all too common occurrence which motorists continue to grapple with at the pumps as, since recently, the cost of fuel went up by $2.00 to cost $107.52 for a litre of E-10 87, $109.17 for E-10 90 gasolene and automotive diesel, which has gone up by $1.11 to sell for $ 107.29 per litre. The earliest figures on the website were $27.4276 for unleaded 87 grade fuel in February 2004, with unleaded 90 going for $28.8704 at that time. Cheap petrol price? According to The Government of Jamaica has taken steps towards creating a legislative and regulatory framework that will facilitate investment in the renewable energy sector. Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell made the announcement on July 24, during his 2012/13 Sectoral Presentation in Parliament. Minister Paulwell said renewables represent the shortest route to both diversification of Jamaica