MARUBENI Corporation, the Japanese firm seeking to purchase Mirant’s 80 per cent shareholding in the Jamaica Public Service (JPS), is concerned about some of the comments which have been made locally about the proposed sale, according to the Finance Minister Omar Davies.

Davies, who was closing the 2007/2008 budget debate at Gordon House, pointed fingers at the Opposition, which had questioned aspects of the transaction.

However, Davies did not say what these concerns were, or whether they were expressed to the government during the current talks with a visiting team from the Japanese company.

“We need to reassure not just Marubeni, but all potential investors that when we say Jamaica is open for business, we mean it,” Davies pleaded.

Last Friday at his post-budget press briefing, Opposition Leader Bruce Golding warned Marubeni against ignoring the views of his Jamaica Labour Party (JLP) in its talks with the government on acquiring the shares.

Golding said that he understood that representatives of Marubeni were in Jamaica, but that there was no contact with the Opposition.

“I think that it would be useful for the Marubeni people to seek our views and our ideas as to the way forward,” Golding told reporters.

Davies yesterday appealed to the Opposition to view the issue “dispassionately” and as objectively as possible.

He said that he was converted to the need to privatise when the JPS came to his ministry to borrow funds to pay recurrent expenses, including wages and salaries, prior to the government’s decision to sell 80 per cent of its shares to Mirant.

In that situation, he said, the JPS could not raise capital to finance expanding capacity, and that led to the decision to privatise.

Davies said he was not defending Mirant’s period of ownership, but noted that over the five years since it took over the company energy generation increased by 15 per cent, the average customer minutes lost had decreased by 24 per cent and, in general, there has been improvement in service levels.

He assured the Opposition that questions from its spokesman on energy, Clive Mullings, such as the need for publication of the audit of the JPS billing system, as well as the release of a report on the accident which cost three lives at the Old Harbour plant in 2005, were legitimate and would be responded to.

However, he said that the demand for full public scrutiny of the negotiations leading to an agreement in principle for Mirant to sell its shareholding to Marubeni cannot be met.

Davies told the House that Mirant would get approximately US$350 million in cash for the sale of the shares, and not the approximately US$600 million that has been suggested. He had previously informed Parliament that Mirant was selling the JPS shares for US$800 million.

The minister told the House that the proposal is for Marubeni to purchase Mirant’s Caribbean portfolio for a total of US$1,082 million. He said that US$350 million of the total figure was to cover existing debts, while US$153 million was ‘purchase power obligation’.

“This means that the portfolio cash equity value is US$579 million. Of this amount, the rest of Mirant’s Caribbean portfolio (Trinidad, Grand Bahamas and Curaçao) is valued at US$215 million, leaving Mirant’s 80 per cent interest in JPS at approximately US$365 million,” Davies said.

“Put another way, whilst the total value of Mirant’s 80 per cent holdings was approximately US$800 million, if we take out the debt which will be assumed by Marubeni and the purchase power obligations, the cash to be received by Mirant is approximately US$350 million.”

“Is this too much?” Davies asked.

He defended Mirant’s performance since purchasing the JPS in 2001 for US$200 million. He said that over the six-year period Mirant invested in generation expansion as well as improvements to the quality of the service.

“Let us not seek to condemn profits by making wild accusations. Rather, let us ensure that the rules governing the operations of the entities protect the rights of the consumers, but also provide an attractive environment within which investors, domestic and external, wish to do business,” Davies said.

He made it clear, however, that he was not suggesting that there should be no rules governing business operations.

“However, once they have been laid out clearly and unambiguously and an entity abides by them, it is imperative that we do not seek to erode confidence in the country by making wild, baseless and uninformed accusations,” the finance minister said.