My Thoughts on Technology and Jamaica: Phillip Paulwell wants Full Energy Sector Liberalization as JPS Co’s Dan Theoc holding on to his Hard End

Wednesday, April 25, 2012

Phillip Paulwell wants Full Energy Sector Liberalization as JPS Co’s Dan Theoc holding on to his Hard End



Since the publication of the Geezam blog article entitled “JPS Co to build Jamaica’s first Gas Turbine Power Plant in St. Catherine” much has been said of the decision to go LNG (Liquid Natural Gas) and the setting up of a bipartisan Energy Council by Minister of Energy and Mining, Philip Paulwell as stated in the article Full speed ahead with LNG”, published 9th February 2012, Go-Jamaica.

Even more criticism has been made of the fact that Jamaicans are still being overbilled and the intended savings 55% to 62% will not be seen for another next three (3) years. There is also a growing unease as to whether Philip Paulwell can deliver as he did when he liberalized the Telecoms Sector in 1998.

The benefit of LNG as a motor vehicle fuel in the form of Auto LPG (Liquid Petroleum Gas) may not be certain either as opined in the Geezam blog article entitled “Auto LPG as a Motor Vehicle Fuel”, even if Jamaican could afford the US$1000 for a basic Auto LPG Kit.

According to the article “Bids to open next year for LNG terminal”, Published Sunday December 4, 2011, The Jamaica Gleaner all these lofty plans to reduce the cost of Electricity generated by the JPS Co by the construction of the LNG Power Plant in Old Harbour rest squarely on the promise by Phillip Paulwell to secure FDI (Foreign Direct Investors) to procure:

  • LNG Supply
  • LNG Floating Storage Facilities
  • LNG Re-gasification Terminal
  • Pipeline Infrastructure to supply JPS Co Power Plants and JAMALCO’s Alumina Works and Power Plants

This as stated clearly by Dan Theoc, JPS Co’s Chief Financial Officer at a Press Briefing held by the JPS Co and the Government in the article “Deadline for energy”, published Friday February 17, 2012 by Arthur Hall, Senior Staff Reporter, The Jamaica Gleaner, quote “Quite frankly, this project will not go forward unless we are certain that natural gas is coming to Jamaica, and I mean certain”. Dan Theoc is quite within his rights to speak his mind.

Albeit the JPS Co is mainly Private Equity owned by a Korean-based Power Company EWP (East-West Power Company Limited) as indicated in the article Korean company will improve operations at JPS — Mullings”, published Wednesday, July 20, 2011 BY ALICIA DUNKLEY Observer senior reporter, The Jamaica Observer, they still have to get the accent of the GOJ as it relates to:

  • The fuel being used
  • Any addition of any generating capacity

This Dan Theoc, JPS Co’s Chief Financial Officer pointed on in a Letter to the Editor on in the Thursday February 23rd 2012AD Jamaica Gleaner entitled “Not Dissing The Minister”, published Thursday February 23, 2012, by JPSCo CFO Dan Theoc, Letters to the Editor, The Jamaica Gleaner. More precisely, the ownership of JPS Co stacks up as thus:

  • Government owns 19.9%
  • Marubeni owns 40%
  • EWP owns 40%
  • Three thousand (3000) independent shareholders own 0.1%

More quotable quotes from Dan Theoc, quote: “We are saying over the next six months the process will be finalized so that we can have certainty on the matter before we move forward in complete earnest with the project”. So it would appear the ball is really in Philip Paulwell’s court, with the onus for the Ministry of Energy and Mining in the next six (6) months to procure the LNG and secure the contractors to begin the construction of the LNG Plant.

This mammoth beast of Power Engineering is being anticipated with much alacrity by many members of the Engineering community. Some new details on the LNG Plant are in order at this point:

  • The construction phase is expected to last some two (2) years
  • The generating capacity of the LNG Plant is 360MW LNG-fired
  • The total cost of the LNG Plant is estimated to be J$52 billion (US$602 million), of which JPS Co is investing US$616 million (J$53 billion)
  • It’s expected to create approximately one thousand two hundred jobs (1,200) in the Old Harbour, St. Catherine area
  • Cost saving to the Jamaican tax payer of US$300 million per year in imported Oil as pointed out in the article “JPS: LNG Power Plant to cut US$300m from oil bill”, published Friday February 10, 2012, The Jamaica Gleaner.

As it relates to full liberalization of the Energy Sector, Dan Theoc is effectively holding on to his hard end in this increasingly interesting game of Dominoes with the Government as stated in the article “Paulwell just thinking aloud with monopoly stance - JPS head”, Published Friday February 17, 2012 by Arthur Hall, Senior Staff Reporter, The Jamaica Gleaner.

His latest statements indicate just as much, quote: “As it relates to the thought of introducing competition (in transmission and distribution), I believe it is just a thought that the minister is thinking aloud. The beauty about this is that's not the minister's decision. We have a clear regulatory framework. The JPS has a license which was extended in August 2011 by the Government of Jamaica regardless of who the minister [is]”.

Clearly Minister Phillip Paulwell has his work cut out for him if he expects to really negotiate his way towards this lofty ideal of Liberalization of the Distribution and Electricity Power Generation to facilitate the introduction of competition in the Energy Sector he has being voicing since being in Opposition.

Clearly too, Diversification of the sources of Energy to include is just as important, with Coal still clearly in the Energy Mix picture due to its low cost and stability of price. Even BioGas, which is really Natural Gas produced from the decay of Organic Material, such as occurs at the Riverton City Dump and Montego Bay Dump as suggested by Minister of Local Government Noel Arscott as stated in the article Let's make money from garbage – Arscott”, Published Friday February 17, 2012, The Jamaica Gleaner

He must continue of the work of the previous Energy Minister Clive Mullings and negotiate towards a better more equitable Energy Mix in Jamaica to the benefit of consumers and Business interest alike.
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