It's costing us!

It's costing us!

Opposition leader raps failure to decide on fuel source

Thursday, February 07, 2013

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OPPOSITION Leader Andrew Holness says delays in deciding on a fuel source for the proposed multibillion-dollar power generating plant in Old Harbour, St Catherine, will only result in more losses for Jamaicans who rely on electricity from the mostly inefficient system being run by the Jamaica Public Service (JPS).

His comment comes in response to indications that the much-touted project is in limbo due to the reported inability of the JPS to source Liquefied Natural Gas (LNG) at a price that would allow the power company to operate without incurring losses.

In December 2011, the Office of Utilities Regulation (OUR) announced that JPS was awarded the right to construct a 360-megawatt combined cycle modern plant, scheduled for completion by mid-2014.

"The project, which will be one of the largest private sector investments to be made in Jamaica to modernise and upgrade the electricity sector, will form the basis for the reduction in the electricity tariffs and growth in the productive sector," said the OUR, in relation to the project that was slated to supply up to 480 MW of new generating capacity for the country.

One year later, the JPS — while emphasising its readiness to begin work on the plant — cautioned that the project would not get off the ground until it was certain that the Government was fully committed to the establishment of an offshore LNG facility.

That facility would have provided the LNG needed to run the proposed power plant.

But in an announcement late last year, Energy Minister Phillip Paulwell disclosed that the Government was no longer interested in being responsible for sourcing the LNG, and had instead decided to give JPS the go-ahead to source the fuel for the new generating plant.

"We are very confident that with the tremendous international reach that Marubeni and East West Power (JPS' parent company) have, they are quite capable of doing this on their own," Paulwell told journalists in October of last year.

But well-placed sources said the entire project, including the construction of the new power plant, might not get off the ground as the JPS has indicated that it is not prepared to proceed due to its inability to source LNG at a price that would make the project feasible.

An official of the power company has confirmed reports that intense discussions have been taking place between the JPS and the OUR in a bid to save the project, which was originally touted as one of the solutions to the high electricity bills being paid by Jamaicans.

It's understood that after being asked by the OUR to submit a final proposal regarding a fuel source for the proposed plant, the JPS conducted additional due diligence and handed in that final document on Thursday of last week.

Commenting on the issue, the Opposition Leader asserted that successive administrations are to be blamed for the turn of events, as they took way too long to make a decision on a new fuel source. "Had we acted quickly on the energy matter — both this administration and the one of which I was a part — it would have been behind us. It may not have yielded any major reduction in the cost of fuel, but it would have increased our diversity in fuel sources and it would have given us a more efficient fuel that would probably generate electricity at a lower rate," Holness said as he addressed journalists at the Jamaica Observer last week.

He contended that the country will continue to pay for the delay and suggests that the Government should remove itself from the process of determining which fuel source is appropriate. "We have lost by virtue of not going LNG, this new delay is going to let us lose even more. There are other options on the table [including] compressed natural gas, coal; my view is that the Government should not be involved in determining fuel sources unless there is an externality from the fuel source that is dangerous to the public," said Holness as he argued for such initiatives to be private sector-led. "Once Government gets into deciding and a discretion is applied, there is room for all kinds of issues, because Government becomes the agent of lobby and you can't tell who is lobbying the Government to do what," Holness explained.

In a recent interview with the Observer, energy consultant and former head of the OUR Winston Hay expressed disappointment over the handling of the entire affair and called on Energy Minister Phillip Paulwell to provide the nation with a comprehensive update on the project.

According to Hay, a decision on a fuel source that would provide a more efficient system is as important as information on the deal being negotiated between the Government and the International Monetary Fund.

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