Minister of Science, Energy and Technology Daryl Vaz says that, in order to safeguard Petrojam’s future viability, and enable it to respond to the changing paradigm of the diversified fuel market, the National Energy Policy has mandated the modernisation of the refinery.

“To ensure that it functions as the least cost option for petroleum supplies … thereby increasing the output of higher value refined petroleum products … replacing imports; and compensating for the switch from oil-fired power plants,” Vaz noted in the Annual Report of the Petrojam Limited for the fiscal year 2020/2021.

According to the minister, a modernised refinery would also be able to produce cleaner fuels which would contribute to Jamaica achieving its National Determined Contribution (NDC) on emission reductions.

“In addition, it would play a strategic role in the Government’s move towards the implementation of its electric vehicle policy, as the newer internal combustion engines require more environmentally friendly fuels,” the minister stated.

Vaz’s views were included in the annual report tabled in the House of Representatives just a day before Jamaica Manufacturers and Exporters Association’s (JMEA’s) President John Mahfood suggested turning the Petrojam refinery into a storage-only facility, as a major step towards bringing down the cost of petrol.

Mahfood aired the proposal on Wednesday, as the main speaker at a virtual meeting hosted by the Lion’s Club of Kingston, when he told the participants that the Government needs to “close Petrojam and convert it to storage (only) in order to bring down the cost of petrol”.

The industry leader made the suggestion as he noted that, despite the best efforts of the Government, it still needed to do a lot more as there are more obstacles to developing the manufacturing sector fully, including the high cost of electricity, and gas, very high-security cost, because of the high rate of crime, and a high level of corruption.

Mahfood said that while Jamaica had a very strong manufacturing base in the 1960s and and 1970s, with manufacturing accounting for 20 per cent of gross domestic product (GDP), today industry accounted for just eight per cent of GDP, which represents a huge decline.

“While we still have rum, beer and cement and some bauxite, our manufacturers are typically very small, producing food items, beverages and sauces,” he said.

“In 1985, when I returned to Jamaica our exchange rate was J$3 to US$1. Today it is J$156 to US$1. Our per capita income is US$5,000, among the lowest in this area. In fact, our per capita income has not changed in the last 12 years,” Mahfood explained.

However, he said that while much of the blame has to do with how successive government have handled the transaction, the manufacturers are also to be blamed for their inefficiency, due to the lack of competition, “and the fact that they were totally dependent on the domestic market for their existence”.