Don't blame JPS

Naturally, there has been tumultuous national outcry over the recent rate increases granted to the Jamaica Public Service Company Limited (JPS). However, we must never forget that companies that are invited to invest here do not invest for altruistic purposes ... they are not investing in Jamaica per se; they are investing in profit-making entities that operate in Jamaica. There is a profound difference between the two things.

In 1892, Jamaica was one of the first countries in the world to receive electricity. Several towns had their own private power companies, but by 1923, only JPS controlled power distribution everywhere on the island. It was granted an all-island franchise in 1966. In 1970, the Govern-ment of Jamaica acquired controlling shares in JPS (as I believe it should for any essential service), but in 2001, JPS once again returned to private ownership when controlling shares were sold to the US-based energy company Mirant.

Back then, I opined that if JPS were viable enough to attract a foreign investor, it was viable enough to remain operational in Jamaican hands employing frugal management principles. The promised influx of equipment and technology needed to significantly upgrade the JPS and bring us 21st-century power supply and reliability was certainly not evident, yet the company managed to earn enough from us to extricate itself from financial disaster and resell JPS to other shrewd private overseas investors.

The finance minister of the day asserted that no local investors were willing to take up the offer to operate the JPS, but I suspect that perhaps, among other things, several incentives offered to foreigners were not offered to local entrepreneurs (as usual). And so, the JPS became 80 per cent foreign-owned.

FINANCIAL HOLES

Recently, in responding to an article of mine that alluded to the pitfalls of selling controlling shares of local enterprises to overseas business interests, a detractor wrote that I "took his breath away" by displaying an "apparent lack of knowledge of exactly how deep Jamaica is in the hole". People like that are failing to appreciate that we may be filling a current financial hole, but in doing so, we are sacrificing the resources that we will need to fill future, much larger, financial holes.

We have a plethora of overseas investors operating here and all make a profit (many make extremely handsome profits) ... an undisclosed portion of which must be converted into US dollars and exported. This depletes our foreign-exchange reserves, but it is the norm for all foreign companies - after all, they must satisfy their shareholders.

We have sold off or have heavy foreign investment in all our major income-earning enterprises. Even our world-class Kingston port is up for sale. I can't imagine what we have left to sell.

Foreign investors are only in it for the profit ... there's nothing malevolent about it; that's just the way it is in the business world. They require a steady increase in income (from our little developing nation) to compete with their international counterparts (in First-World countries). Consequently, scheduled price increases are expected if they are to remain financially vibrant.

Interestingly, however, especially in the case of the JPS, its inflation-linked rate hikes always trigger a spiralling stratospheric inflation, which leads to more scheduled inflation-linked rate hikes and so on; this increases their profit margins but only compounds our economic woes.

Therefore, in all fairness, although Jamaicans have an adversarial relationship with the JPS, we shouldn't blame it. JPS is only doing what it is supposed to do - make money for itself.

Garth A. Rattray is a medical doctor with a family practice. Feedback may be sent to garthrattray@gmail.com or columns@gleanerjm.com