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Paulwell wants procurement power in his ministry

BY GARFIELD MYERS Editor-at-Large South/Central Bureau myersg@jamaicaobserver.com

Friday, May 02, 2014    

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MANDEVILLE, Manchester — Claiming that as a country "we talk a lot and don't get things done," Phillip Paulwell argued late Wednesday for the removal of procurement responsibilities from the Office of Utilities Regulations (OUR).

Speaking in the context of the crisis surrounding the 381MW energy plant bidding process, Paulwell told the Manchester Chamber of Commerce that the OUR was ill-fitted for the procurement role because of its regulatory responsibilities.

"I think they (OUR) mean well, but I am now of the view that that is not the right place to do procurement because they have to regulate as well," he told business leaders at Golf View Hotel.

Later in a question-and-answer session, Paulwell insisted that "some things we have to do differently, we have to separate procurement from the OUR..."

Said he: "I am not berating the OUR, but the OUR is a regulator; they are supposed to be regulating the service. They are not supposed to be going out there to procure the service... I believe the functions must be distinct now."

The minister said he was not campaigning for procurement to necessarily fall under his supervision "but I am saying there must be a different body (and) it can't be unrelated to me".

That said, Paulwell suggested that the procurement office "could be adequately housed in a unit in my ministry with clear guidelines and procedures to make the process transparent and reasonable".

Paulwell, the energy minister, has come under intense criticism for intervening in the procurement process which led to the Hong Kong-based Energy World International (EWI) being chosen to construct and run the 381 megawatt plant, which is seen as crucial to reducing Jamaica's high energy costs to competitive levels. The minister has also been dragged over the coals for changes to terms of the licence granted by the OUR.

Last year, Jamaica's Contractor General Dirk Harrison said Paulwell's intervention was unfair and compromised the integrity of the procurement process. And last week the Inter-American Development Bank (IDB) -- which is looked to by lenders for a seal of approval on projects -- refused to help fund the energy project because of concerns with the procurement process. But on Wednesday night, Paulwell -- who said he believed the IDB's position was the result of a misunderstanding and would be sorted out, argued that as energy minister he should have not just "responsibility" but "authority". While pledging to continue a relentless drive to reduce Jamaica's energy costs, Paulwell said, "I am frustrated because you look to me as the minister to get the price of electricity down but when you look at the process to achieve that the minister falls somewhere down that chain, because... the body that has responsibility to go out there and find people to build the plant, ...to diversify the fuel source, is not the minister but... the OUR".

During the question-and-answer session, Paulwell said "The OUR doesn't come here and you (business leaders) ask them whether you will get cheap electricity, is me yu asking that, and I have to go to the country in two or so more years to say why how come, not the OUR.

"So I can't have that responsibility where you say 'the minister didn't perform because the price of electricity is the same' and not have the authority, the function, to go out there and find the thing...," he said.

Giving the background to the selection of EWI as the preferred bidder, Paulwell recalled that it was tied to that company's pledge to provide energy from natural gas and sell to the national grid (electricity provider Jamaica Public Service Company) at 12.8 cents per kilowatt hour (kWh).

Currently Jamaica's electricity is based on expensive heavy fuels and diesel which analysts agree have contributed significantly to the uncompetitiveness of Jamaican industry.

The change, Paulwell said, would have translated to huge savings for Jamaican consumers who now pay 42 US cents per kWh, which he described as "one of the highest in the region, if not the world".

Said Paulwell: "The Energy World International people had met with me. The very first day, they met with me was the first day I took what they said to me to Cabinet because for the first time we had some people coming to say to us that they have gas.

"The Government had been trying to find gas... we've been in negotiations with Trinidad and Tobago, we signed an MOU and it didn't happen. I myself have travelled the globe trying to find gas because we have to move away from heavy fuel oil and diesel.

"For the first time these people came and said they had gas and we were able to determine that they do own a gas field in Indonesia. ...They were going to sell to the grid at 12.8 cents. ...For the first time in this agreement there is a cap on the price of fuel guaranteed at 20 years. They had to sell to JPSCo at 12.8 cents. ...The nearest company to that is a company going to charge us 21 cents.

"I know what my people want. I stick my neck out for what they want," he said. Paulwell reiterated that EWI had lodged its money for the performance bond with the Hong Kong and Shanghai Banking Corporation (HSBC).

"It is a reputable bank, so we anticipate after they have done their due diligence the bond will be fully in place, the company (EWI) has committed (Tuesday), the price and the project...," he said.

He described the expressed doubts of the IDB as "bad news" but added "I really believe that is a misunderstanding and will be sorted out and rather than people trying to put the minister's neck on the line I think we should appreciate and understand how important this is to the future of our country... we have been on this road before and trust me, if this one fails it will be sometime before another comes forward".

He responded favourably to a suggestion from the floor that Jamaica should seek financing from China if affordable financing was unavailable from traditional sources.

"I can't say too much along the lines you have just spoken, (but) with that C word you are on to something," he said.

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