Scotiabank Jamaica has created a loan facility which can be accessed by small and medium-sized enterprises (SMEs) as well as homeowners to purchase renewable energy systems.
The loan is being offered at a rate of 9.75 per cent per annum. Also available is an unsecured loan at a rate of 15.99 per cent. The institution
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 Jamaica’s electricity costs are meteoric because of JPS’s outdated plants, which deliver energy inefficiently.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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Marcella Scarlett,
Gary Barrow will join the Jamaica Public Service Company (JPS) on September 3 as a senior vice-president in charge of customer operations and support services.
Barrow was once the president of telecom LIME Jamaica, when it traded under its old name, Cable & Wireless Jamaica.
His track record, however, spans other disciplines, including finance, business transformation, government relations, power systems and process re-engineering, said JPS.
Barrow’s appointment comes as JPS is attempting to re-engage Jamaicans and put some polish on its tarnished image. Jamaicans are upset at the more than 40 US cents they are paying to consume power provided by the monopoly distributor.
JPS President Kelly Tomblin is shooting for “a total transformation” of JPS culture.
In that vein, Barrow will have “overall responsibility for transmission, distribution and our parish operations, and so will play a key role in helping to change the way we serve our customers. Gary’s extensive leadership experience, along with his track record of successful business transformation, will definitely be an asset during the culture change process at JPS,” Tomlin said.
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James McNish,
There is never uncertainty when Shelly-Ann Fraser-Pryce rockets from the blocks in a 100-metre dash. Usain Bolt and Yohan Blake may get off a bit behind the competition, but they accelerate with such command that the prize is usually theirs.
The same, unfortunately, cannot be said for how the Jamaican Government manages the country’s affairs, exemplified this week by the confusion over energy policy.
Energy Minister Phillip Paulwell had long since declared his Government’s intention to break the monopoly in transmission and distribution (T&D) of electricity. That seemed to be settled policy. On Tuesday, Mr Paulwell was contradicted by Dr Carlton Davis, a senior adviser to Prime Minister Portia Simpson Miller. He favours a “regulated monopoly” and suggests that Mr Paulwell’s pronouncements were, for the Government, not conclusive.
Then, Prime Minister Portia Simpson Miller tiptoed between the raindrops. The upshot continued, if not deepened, uncertainty.
PROHIBITIVE COST
The policy tug of war might have been considered just another bit of Jamaican political theatre, but the fact is that the issue at hand is of great importance and urgency. There is clear consensus that, bad economic management apart, the high cost of electricity is the greatest constraint to the competitiveness of Jamaican firms and to growth in output.
Jamaicans pay upwards of US$0.40 per kilowatt-hour (kWh) of electricity, higher than the rate in most of its regional economic competitors. Policymakers have talked much, over many years, about strategies to reduce the cost of energy. They have achieved little.
Recently, though, we appeared to have been getting somewhere, with a plan to shift from expensive oil to cheaper fuels to generate power. The idea is to start with natural gas, although coal remains in the mix.
Several months ago, the Jamaica Public Service Company (JPS), the light and power provider, and its owners won a bid to establish a 360-megawatt power plant that is to be fired by natural gas. The Government is also about to rule on bids for a liquefied natural gas storage and regasification facility.
The projection is that using cheaper natural gas to fire this power plant, combined with its greater efficiency, will lead to a reduction in the cost of electricity of between 30 per cent and 40 per cent.
Paulwell’S AMBITIOuS TARGETS
At the same time, Mr Paulwell has been loudly promoting the break-up of the JPS’s monopoly on the grid, arguing that this could deliver the 60 per cent drop in the price of power that he has set as his benchmark.
The minister’s critics, however, argue that the energy minister’s focus on the power company’s T&D monopoly has introduced uncertainty into its operations – exacerbated by a recent court ruling against the exclusivity of the JPS’s operating licence – especially with the company being in the market for capital to finance the gas-fired plant.
The attention, critics feel, should be on fuel choice. Dr Davis agrees. He believes that Jamaica’s electricity market, with peak demand for under 700 megawatts, is too small for a competitive free-for-all.
The statement from the prime minister’s office acknowledges the market uncertainty engendered by the liberalisation debate and the need for continuity “in the short run”. But it makes no policy commitment.
We wonder what would have been the result of Jamaica’s record run in the men’s 4x100m relay at the Olympics if there was such uncertainty in the team.
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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Power provider, Jamaica Public Service Company (JPS), disclosed depressed quarterly profit of half-billion dollars on Wednesday but avoided accounting for the pending loss of its monopoly status amid court appeals and talks with the Government over securing its exclusive licence.
JPS made net profit of US$5.8 million (J$528m) at second quarter June 2012, down 41 per cent compared to year-earlier levels.
The company’s reduced profit resulted from a 44 per cent spike in finance costs to US$12.6 million compared with a year earlier.
Directors Hisatsugu Hirai and Fitzroy Vidal said in a joint note that it was too early to quantify the impact of the Supreme Court decision that set aside JPS’s monopoly but did not invalidate the licence.
“The outcome of this court decision, which the company intends to appeal, cannot be determined with certainty at this time and no provision has been made in the financial statements regarding this matter,” stated the directors on behalf of the board.
Hirai is chairman of the power utility.
Earlier this week, JPS president and CEO Kelly Tomblin said the company could see its US$450 million of long-term loans placed in default if it loses the legal appeal to keep its all-inclusive licence and if the Jamaican Government refuses to amend the language in the agreement.
But it also means that the financing of the near US$620-million planned natural gas power plant is virtually on hold pending the appeal. JPS’ loans were premised on its distribution monopoly arising from its licence, which runs to year 2027.
For the half year, JPS made net profit of US$7 million, or one-third the HY2011 results of US$21 million, despite an uptick in revenue to US$581 million.
Last month’s Supreme Court ruling invalidating JPS’ monopoly on distribution of electricity was a victory for claimants Dennis Meadows, Betty Ann Blaine and Cyrus Rousseau who challenged the exclusive 20-year licence granted by the then minister of mining and energy to the JPS in 2001.
Electricity charges in Jamaica remains one of the highest in the region due to its reliance on expensive oil, which has tripled in price since 2000.
JPS’ fuel bill topped US$407 million at half year, rising by more than 10 per cent year-over-year, but was flat at US$201 million in the second quarter.
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