The Jamaica Public Service Company (JPSCo) declared on Wednesday, December 2, quarterly dividends payable on December 11, 2009 on 22 billion shares to its shareholders. This follows on an annualised net profit per share of US$0.04 (J$3.56) and a dramatic improvement in the company’s net profits overall.

Net profits grew 87 per cent from US$1million (J$89 million) in September 2008, to US$8 million (J$7.12 billion) in the similar period of 2009, even while key expenses decreased. The cost of fuel, slowed over the quarter from a loss of 223 million to 142 million an indication of the stabilization of the monthly exchange rate which reflect actual fluctuations in fuel costs

“These rates are determined in accordance with the tariff regime, which provides that the OUR annually reviews the company’s efficiency levels and where appropriate, adjusts these in the tariff, primarily relating to fuel revenues,” the directors noted in the financial statements. If the exchange rate continues to stabilize, the costs of fuel will continue to decline, contingent on JPSco’s continued improvement in efficiency.

The company has indicated its commitment to such improvements stating that “As part of our ongoing efforts to improve organizational efficiency, JPS continues to examine and make necessary adjustments in our operations. To that end, several initiatives have been implemented in core operational and support areas of the Company”

Among the initiatives are projects to reduce theft of electricity, moderations to their generating units and the use of renewable energy sources of fuel, including hydro and wind power and Compressed Natural Gas (CNG).

JPS began preliminary work on a project to convert its combined-cycle plant at Bogue, Montego Bay to use CNG by 2011 and is in discussions with potential suppliers of CNG in Venezuela and Columbia.

“JPS has also entered a partnership with the Petroleum Corporation of Jamaica and Petrojam for the construction of a petcoke plant at its Hunts Bay location in Kingston. This plant, which will provide an additional 100 – 120 MW of power, is expected to result in significant savings on fuel, as it will use petcoke from the Petrojam Refinery for the generation of electricity,” the company’s financial statements indicated.

Given that the majority of its business is conducted in the United States dollar, it is recognised as the functional currency of the JPS. The 2008 financial crisis and the increased demand for foreign exchange resulted in foreign exchange losses of US$566,000 (J$50 million) in 2008, which improved over the comparative quarter following the stabilization of the exchange rate at approximately $89 ($J:$US). The company recorded gains of US$5.9 million (J$533million) in foreign exchange in September.

The company has also increased its provision for losses with an increase in its cash holdings.

The September 2009 quarter shows an increase in cash and cash equivalents from the comparative period last year on the increase in the amount set aside monthly in case of a major catastrophe affecting the company’s operations. The self insurance sinking fund, a requirement of the Office of Utilities Regulation, increased from US$6.4 million (J$569 million) in September 2008, to approximately US$9 million (J$801 million) in the comparative period 2009.

Maintenance expenses, recovered from a loss of US$19 million (J$1.7 billion) to US$16.7 million (J$148 billion) over the comparative quarters, as did the net financing costs which recorded a 15 per cent percent reduction from US$7.8 million (J$694 million) to US$2 million (J$179 million) over the quarters.

80 percent of JPSco’s shares (ordinary or preference) are held jointly by Marubeni Corporation and the Abu Dhabi National Energy company in the United Arab Emirates. Another 19.9 per cent of the shares is held by the Accountant General and Development Bank of Jamaica on behalf of the Government of Jamaica (GOJ). The remaining 0.1 per cent is held by individuals.