THE nation’s electricity provider, Jamaica Public Service Company (JPS), earned US$9.4 million ($841 million) net profit after-tax due to a 40 per cent jump in revenues with core expenses remaining flat for the quarter ending March 2010, which reversed the US$1.6 million ($143 million) loss it made in the similar quarter in 2009.

The company’s profit performance resulted from a US$64.8 million jump in revenue over the corresponding quarter in 2009 to US$223.1 million, and only a 4.4 per cent increase in operating expenses to US$32.9 million from US$31.5 million comparatively, according to just-released financials to the Jamaica Stock Exchange.

Revenue was affected by fluctuations in the global price of oil used to produce electricity. JPS fuel cost rose to a whooping US$139.9 million in the review quarter from US$76.4 million in the similar 2009 quarter. The JPS is also benefiting from an energy charge that the Office of Utilities Regulations approved last year which represented an increase in rates of 23 to 29 per cent.

JPS also saw decreased cost associated with power purchased from Independent Power Producers (IPPs) — to US$17.26 million during the quarter from US$17.7 million during the similar quarter of 2009. JPS passes on most of the fuel cost on consumers while the cost of purchased power is billed to customers.

Higher net profit also resulted from considerably lower net finance cost — down to US$7.85 million in the review quarter from US$24.5 million in the similar quarter of 2009. This was primarily due to foreign exchange (FX) losses that were incurred in the 2009 quarter which cost the company US$16.4 million in FX losses versus only US$840,000 in the March 2010 quarter.

The majority Japanese- and Arab-owned company’s retained earnings grew to US$105.88 million during the review period from US$64.3 million at March 2009. Its cash and equivalents balance during the review period was some US$6 million lower at US$25.5 million versus US$31.6 million a year prior. The company’s working capital also strengthened to US$104.9 million versus US$72.1 million a year prior.

The company’s long-term loans increased to US$249.6 million versus US$243 million a year prior, but its equity actually increased US$41.5 million to US$409.1 million compared with the previous year.

In March 2009, Japanese-based Marubeni Corporation sold a 40 per cent stake in JPS to Abu Dhabi National Energy Company’s (TAQA) for US$320 million for 50 per cent of Marubeni Holding’s Caribbean power assets. The deal grew TAQA’s power assets to 11,650 MW from 10,500 MW, and extends TAQA’s energy value chain to power transmission and distribution. TAQA is growing so fast it argued that its Caribbean joint venture with Marubeni will aid it in tripling its size to US$60 billion in a few years. Its assets now stand at US$24 billion in 2010.

Marubeni originally bought US-based Mirant Corporation’s Caribbean-based operations in April 2007 for US$1 billion including related debt of US$350 million, power purchase obligations of approximately US$153 million and estimated working capital at closing. The net proceeds to Mirant from the sale were some US$565 million after payment of transaction costs estimated to be approximately $14 million.

Mirant’s Caribbean business included controlling interests in Jamaica Public Service Company and Grand Bahama Power Company. Mirant also owned 39 per cent of PowerGen, the owner and operator of three power plants in Trinidad, 25 per cent of Curaçao Utilities Company which provides electricity and other utility services and a US$40-million convertible preferred equity interest in Aqualectra, an integrated water and electric company in Curaçao.

The Jamaican Government sold JPS in 2001 for some US$201 million.