IN a vote of conditional confidence, rating agency Caribbean Information and Credit Rating Services (CariCRIS) has reaffirmed a stable credit rating for the Jamaica Public Service Company (JPS), judging it able to weather a perfect storm of hurricane recovery costs and profound uncertainty over its future operating licence.

The light and power company was reaffirmed at CariA (local currency rating) and CariA+ (foreign currency rating) on the regional rating scale with its Jamaican rating at jmAA+ (local currency rating) — a high-grade rating on the Jamaican national scale. The outlook for JPS was maintained at stable.

“The stable outlook is predicated on the high likelihood that JPS will maintain overall operational and financial stability over the next 12 to 15 months, notwithstanding the adverse effects of Hurricane Melissa,” CariCRIS stated in its release.

JPS is responsible for the transmission and distribution (T&D) of electricity in Jamaica under its electricity licence which expires in July 2027. It accounted for 25 per cent of Jamaica’s electricity generation while the remaining balance was supplied by independent power producers (IPPs) as of June 2025.

However, the Government of Jamaica (GOJ) has indicated that it does not intend to renew the licence under the current terms. The GOJ intends to introduce reforms aimed at lowering costs, promoting competition and expanding renewable energy integration. The announcement by the GOJ is keeping under conditions 3(2) of the existing licence which speaks to the GOJ acquiring the licensed business when the licence expires.

“Furthermore, the limited duration of the existing all-island licence constrains the company’s ability to secure medium- to long-term financing and power supply contracts. To that end, JPS has reprioritised its 5-year capital investment programme, deferred several infrastructure projects and scaled down certain modernisation initiatives,” CariCRIS explained on the implications of the current licence limbo.

JPS has reduced its smart grid expansion programme from US$2.7 million to US$1.7 million and postponed upgrades to infrastructure like transmission lines, substations and conductors. The north-east coast electrification project was also scaled back due to the financing constraints. Despite these moves, CariCRIS highlighted that modernisation and service reliability projects remain ongoing and should underpin stable operations into 2026.

The GOJ has announced that it will lend JPS US$150 million for five years at 5.5 per cent — terms considered supportive — to support the restoration efforts in the major areas affected by Hurricane Melissa.

According to the regional rating agency, JPS has limited insurance coverage for its T&D assets which highlights its vulnerability to large-scale weather events. Its Electricity Disaster Fund (EDF) had US$52.7 million as of December 2024 which gives coverage to just 10.1 per cent of its T&D assets. This vulnerability has been tested by successive storms, including Hurricane Beryl in 2024 and the more recent Hurricane Melissa.

“This event reinforces the company’s vulnerability to natural disasters given its aging grid infrastructure and limited catastrophe insurance coverage, which remains materially inadequate relative to the scale of damage observed under both Hurricane Beryl and Melissa. Restoration costs may likely exceed self-insurance capacity and place pressure on short-term cashflows and margins; however, CariCRIS notes the high likelihood of extraordinary monetary or credit support from the GOJ, should the need arise,” CariCRIS explained.

JPS’s 2024 consolidated revenue improved two per cent to US$1.09 billion as it benefitted from higher tariff rates despite selling 3,354 GWh of electricity. However, operating profit dipped two per cent to US$253.78 million due to higher operating expenses associated with Tropical Storm Raphael and Hurricane Beryl. EBITDA (earnings before interest, tax, depreciation and amortisation) was slightly higher at US$270.75 million. Consolidated net profit declined nine per cent to US$61.88 million but remained above CariCRIS sample of regional peers which had US$18.7 million of average net profit.

JPS had US$101.4 million in cash and cash equivalents plus US$149 million of undrawn liquidity buffers at the end of 2024. This translated to a current ratio of 1.1 times with a debt service coverage ratio (DSCR) of 1.3 times.

For the overall nine months, JPS consolidated revenue increased three per cent to US$836.84 million, but consolidated net profit declined 14 per cent to US$42.52 million due to higher operational expenses and finance costs. CariCRIS is projecting that the full year consolidated net profit for 2025 to decline to US$19.5 million due to the disruption from Hurricane Melissa but expects this figure to rise to US$28.2 million in 2026 with the full restoration of the national grid. JPS is also expected to comfortably meet its debt obligations with an interest cover of 3.7 times and DSCR of 1.5 times.

“With approximately US$62.8 million in debt coming due at the end of 2026, the group is expected to comfortably repay through internally generated cashflows. Liquidity is expected to remain adequate, supported by holdings of cash and cash equivalents of approximately US$17.9 million and liquidity buffers that can be utilised,” CariCRIS added.

According to Minister Vaz in a November 25 parliamentary session, JPS has put a hold on dividends indefinitely until the situation around its license is normalised. This has direct implications for its shareholders. JPS paid US$29.50 million in ordinary dividends during 2024 and paid US$16.50 million in ordinary dividends during the nine months ended September 30. JPS paid US$2.34 million in preference dividends across its five classes of preference shares in 2024 but has not declared preference dividends since May 2025. This means that JPS has skipped out on the August and December preference dividend declarations, effectively halting a key income stream for holders like pension funds and other institutional investors.

Marubeni Corporation and Korea Electric Power Corporation equally own 40 per cent of JPS with GOJ owning 19.9 per cent and the remainder held by private individuals. The JPS preference shares are held by various private investors and institutional investors like pension funds.

“CariCRIS also highlights the review of the electricity tariff framework19 and ongoing license renewal discussions, due by 2027, as material regulatory developments that could reshape market competition and capital planning. Hence, CariCRIS will closely monitor these developments as key determinants of JPS’ longer-term stability and investment capacity,” CariCRIS closed.