My Thoughts on Technology and Jamaica: LPG and the Challenger Transport Co Ltd - A Cheaper Fuel

Saturday, March 20, 2010

LPG and the Challenger Transport Co Ltd - A Cheaper Fuel

The usage of LPG (Liquid Petroleum Gas) to power motor vehicles is nothing new, as this a Fuel that is commonly in use in the Dominican Republic. What is even more curious is that is that there is a need for the usage of LPG, as the only market here in Jamaica is for forklifts, which traditionally purchase their LPG gas cylinders for Fuel from a LPG Retailer. LPG an alternative Fuel to gasoline and diesel that is not only cleaner burning, but also cheaper as well, averaging about JA$50 per liter.

What is new to us Jamaicans is that LPG usage may become more prevalent, if a small local transport company has their way. Challenger Transport Company Ltd (926-6414) is a company more known for the rental of buses and trucks has decided to launch the installation and servicing of such units in Jamaica.

Challenger Transport Company Ltd (926-6414) have had its staff undergo two (2) years of extensive training of its technicians to be ISO9001 certified to not only offer the installation but the sole maintenance of the units based on the presentation made on “Smile Jamaica Morning Time broadcast 8:15am March 16th 2010 on TVJ, Television Jamaica.

According to their presentation and a subsequent call to the Marketing Manager, a Mrs. Valere, their system comes with a switch that allows the engine to toggle between using the LPG and the regular vehicles Fuel and is compatible with vehicles older than 1986. Albeit nothing new, all the learned John Public can say: why was this not implemented earlier?

But the cost and my gasping of amazement aside, it is the mileage that is of interest to the learned John Public, as it appears that LPG retails for approximately JA$50, albeit by the time of launch this could work out to be higher, it is still way cheaper than any of the two (2) fuels currently in use in Jamaica.

This news, now publicly known, should be a welcome breath of fresh air as it means that there is some relief for the motoring public and the excessive levels of taxation that are de riguer of the IMF (International Monetary Fund), which the Government of Jamaica had signed itself to as part of its Economic recovery plans, as stated in the article “'No more skylarking' - PM outlines Economic programme and Debt Exchange”, published Thursday, January 14, 2010 by Arthur Hall, The Jamaica Gleaner.

The Government of Jamaica is now reaping success that Senator Audley Shaw, Minister of Finance is only to proud to boast about with a 99% compliance rate and ratings readjustments to previous levels by the ratings agencies after the successfully concluded JDX (Jamaica Debt Exchange) thus far achieved as stated in the article “JDX ends at 99 per cent; Minister says thanks”, published Thursday, February 25, 2010, The Jamaica Observer.

The Liberalization of the Energy Economy, is now of greatest importance ever, as it is necessary in order to have production and manufacturing, the main driver that will move us from being a Net Importer of foreign goods to suit our growing appetite for la dolce vita to a next exporter and earner of foreign exchange, as stated in the article “Debt Swap and Debt Trap”, published Sunday 14 February 2010 by Robert Buddan, University Lecturer in the Department of Government, and hence result in employment and further growth in the Services Sector.

And this development seems to be the first step in this direction, and curiously enough, it is not a Government of Jamaica sponsored project, as this seems merely a business venture. It is good to note that the learned John Public did predict that the Government of Jamaica, as part of its Energy Policy, would have to begin the process of changing out vehicle engines or the vehicles themselves via reduction on taxes charged to encourage people to trade up to a vehicle that is a flex Fuel vehicle a prediction which was based on the Energy Policy statement to push towards higher blends of “gasohol” eventually reaching E85 by 2015.

This process had already begun with the announcement in 2008 that only vehicles that are three (3) years old or less will be allowed into the island, thus resulting in certified Used Car Dealers having to get rid of older non-compliant vehicles they had already imported. Thus it seems this recent announcement by this private company pre-empts the Minister of Energy, James Robertson, as possibly they may not have seen this as feasible or worse, it was never on their radar as being feasible.

This may be a blessing in disguise, as with the sticker shock that will be experienced by motoring public, John Public further predicts that this service will be mainly utilized by companies, mainly those that have large fleets of vehicles such as Telecom ProviderLIME, JUTC (Jamaica Urban Transport Corporation), National Bakery, Red Stripe and other companies that do daily island wide deliveries not to mention generators around the island, which can also be made to run on LPG.

With plans to eventually go island wide, estimated to take about two (2) years via a franchise model, as according to the Marketing Manager, Mrs. Valere (926-6414) it would seem that this company, in keeping with its name, has come to “challenge” the Government of Jamaica to ramp up the implementation of most of the requirements of the Energy Policy put forward by Senator James Robertson, Minister of Energy and Mining. And it seems to be a legitimate proposition, due to the following reason: LNG, which is another form of LPG (same chemical makeup) is soon to be coming to Jamaica!

The Senator James Robertson, Minister of Energy and Mining in the Government of Jamaica has stated in Parliament that Government of Jamaica plans to liberalize the Energy Sector, paving the way for Third Party Power Utility Companies to come to Jamaica to not only produce Electrical Power but to also have a license to distribute, as currently under the Power and Utilities Act, JPS Co (Jamaica Power Service Company) is the only Power Utility Company that can legally produce and distribute Electrical Power.

Other Power Utility Companies operating in Jamaica can only produce Electrical Power and resell it to JPS Co (Jamaica Power Service Company)  but they cannot distribute it e.g. JEP (Jamaica Energy Partners) in Old Harbour, which has two (2) floating Power Barges, Doctor Bird 1 and Doctor Bird 2 as well as JEPP (Jamaica Energy Power Partners).

It is very likely, with the current Recession, that there will be an accelerated push for the full Liberalization of the Energy Sector, possibly via negotiations as was the case with the Liberalization of the Telecom Sector in 1997 by the then Senator Phillip Paulwell, Minister of Information and Telecommunications as the Government of Jamaica seeks to sell off its stake in Public Sector Companies that are loss making e.g. Air Jamaica, Jamaica Railway Corporation, JPS Co (Jamaica Power Service Company), etc.

Thus, based on these current Economic conditions, any such Power Utility Company would have to demonstrate the following to be allowed to get a Power Utility Company License to produce and distribute Electrical Power in Jamaica:

1.      Power must only generated using Renewable Energy and not increase the Government of Jamaica’s Oil Bill
2.      It must be a source of Taxable Revenue
3.      It must be signatory to a Bilateral Trade Agreement similar to those signed by other FDI (Foreign Direct Investor)
4.      It would have to not only produce its own power from Renewable Energy sources but would also have to aid Jamaica in producing Biofuels for the Domestic and Export Market e.g. LNG (Liquid Natural Gas)., E80, Bio-Diesel
5.      It would have the option to go into Telecoms and become a Telecoms Provider
6.      The Government of Jamaica would have to have a controlling stake in the Power Utility Company, with decision-making capabilities with regards to the Power Utility Company long term
7.      It would introduce Smart Grid Technology that would allow for the Transparent Billing of Commercial or Residential Customers and Subscribers and Auditing by Third Party and Government of Jamaica Auditors
8.      It would create significant employment in the Energy Sector both for students from local Universities but also for local contracting companies.
9.      It would have to demonstrate financially viability, cost effectiveness and technically feasibility
10.  It would have to demonstrate that it has little Environmental Impact and does not contribute to Environmental Pollution
11.  It could guarantee Electrical Power to all Jamaicans at rates competitive to that of JPS Co (Jamaica Power Service Company) without Government of Jamaica subsidies.

As the Electrical Power has to be produced by Renewable Energy Sources, the lists of such Renewable Resources available to the Power Utility Company are as follows:

1.      Wind (Land Based and Offshore)
2.      Solar (Photovoltaic and Solar Steam)
3.      Hydroelectric (Natural and Artificial Reservoir)
4.      LNG
5.      Hydrogen Gas (Sequestered from Sea Water)
6.      Hydrogen Fuel Cells

One of the major sources of Electrical Energy for the Power Utility Company will be LNG. According to the article “LNG for Jamaica a national priority - Manning”, published Friday June 26, 2009, by Linda Hutchinson-Jafar, The Friday Gleaner, ( Prime Minister of Republic of Trinidad and Tobago, Patrick Manning, has stated that LNG  for Jamaica is a “national priority”.

This with Republic of Trinidad and Tobago supplying Jamaica with LNG  to Jamalco so as to lower the cost of the production of alumina, which would then be shipped to the Alutrint Facility in Republic of Trinidad and Tobago to be smelted and converted to Aluminum.

According to another article “No Trinidad LNG for Jamaica anytime soon”, published Friday December 15, 2006, by Linda Hutchinson-Jafar, The Friday Gleaner, Republic of Trinidad and Tobago had drilled a Test Well at a cost of US$80 million and had found no Oil or LNG, hence they decided they were unable to supply Jamaica with LNG due to unavailability of supply.

The fact is that there is now a supply of LNG coming to Jamaica, possibly by 2010 - 2011, with a possibility of more due to increased competition from LNG suppliers in China, the Middle East and Far East countries. According to the article “Rivalry sends Trinidad in search of new LNG markets”, published Saturday, July 4, 2009, by Linda Hutchinson-Jafar, The Saturday Gleaner.

The market for LNG has since changed for Republic of Trinidad and Tobago LNG since 2006, as stated by Robert Riley, Chairman and CEO (Chief Executive Officer) of BP of Trinidad and Tobago. Currently there is no central body or cartel that controls the price of LNG worldwide, much in the same way that OPEC (Organization of Petroleum Exporting Countries) controls the price of Oil worldwide.

These producers, for who LNG  is merely a by-product as they produce more valuable chemicals such as methanol and ammonia, can flood the LNG  Market with large and cheaper volumes of LNG . The United States of America is the Republic of Trinidad and Tobago’s largest buyer of LNG.

Thus the possibility exists that these cheaper suppliers of LNG can effectively compete with Republic of Trinidad and Tobago for supply to the United States of America, presently the largest current and future user of LNG.

The United States of America, under an initiative spearheaded by President George W. Bush, is looking to Renewable Energy as a means of reducing the United States of America’s dependence on Foreign Oil. As such, LNG is part of the Renewable Energy mix for the United States of America for its Domestic Supply of Fuels along with Bio-Diesel and E80 to be used for Electrical Power Generation and Motor Vehicle Fuels respectively.

Thus I decided to write a proposal for such a Power Utility Company. This Proposal takes into account the current Recession worldwide and the fact that Republic of Trinidad and Tobago has decided to supply Jamaica with at least one (1) Train of LNG, with the possibility of getting additional three (3) Trains of LNG from Republic of Trinidad and Tobago by 2011-2012 as the market for LNG from Republic of Trinidad and Tobago begins to contract due to the availability of cheaper LNG from LNG suppliers in China, the Middle East and Far East countries.

As such, for Republic of Trinidad and Tobago’s survival in an Unregulated LNG  Market, it is most likely the Republic of Trinidad and Tobago would consider the option of selling the additional three (3) Trains of LNG  to us, considering the fact that Republic of Trinidad and Tobago cannot and will not be able to find any market for it, as it will be too expensive in the future as their current markets Chile and Brazil who will be courted by LNG  suppliers in China, the Middle East and Far East countries, suppliers

Because of economy-of-scale can effectively compete with Republic of Trinidad and Tobago in terms of Pricing and Volume of Supply. It would thus be in the Government of Jamaica’s and the Government of Republic of Trinidad and Tobago’s best interest with respect to fixing the Trade Deficit that exists between the two (2) countries.

It would also help with the Republic of Trinidad and Tobago’s Trade Deficit with CARICOM to display a strong interest in the recovery of the entire CARICOM Trading Bloc by selling the additional three (3) Trains of LNG as suggested above to Jamaica and CARICOM with the following benefits:

1.      Electrical Power Generation
2.      Public Transportation (Jamaica Urban Transport Association, Jamaica Railway Corporation
3.      Private Passenger and Carrier Vehicles modified with flexfuel engines to use LNG, E80, Bio-Diesel, etc.

This Proposal lays out the Basic Groundwork for such a Power Utility Company, which I will call Project Green Lantern, which would satisfy the requirements of the Government of Jamaica.

If successful, this would create an alternative to JPS Co (Jamaica Power Service Company) using Renewable Energy, at much cheaper rates when economy-of-scale is applied, generate employment for Jamaicans, create Taxable Revenue for the Government of Jamaica and be a model for Liberalization of the Energy Sector that can be copied and replicated by other countries worldwide.

Challenger has now, in its now simple way, begun to shake up the Government of Jamaica into urgent action and in a single blow made the possible introduction of flex Fuel engines with this installation a Jamaica reality.

Thus bringing some relief from a Recession that is predicted to last another seven (7) years, even if the Recession in the United States of America were to be over by 2010 due to its reliance on debt to encourage spending in the short term, its abundance of ill-placed faith in the Services Sector and lack of investment in the Production Sector.

This “Second” Recession, referred to as a Double Dip Recession or “W” shaped Recession Recovery as opposed to a long term “U” shaped Recession Recovery is a theory which is echoed by Dennis Chung in the article “RISK OF A DOUBLE-DIP RECESSION?” published Friday, September 18, 2009, contributed by Dennis Chung, Business Observer and will lengthen the period of the recession until the year 2017, so any relief in the main driver of inflation the learned John Public strongly welcomes. 


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