EDITORIAL - Paulwell's challenge

IT COULD only be the stark and raving mad who wouldn't support Phillip Paulwell's intention to aggressively push down the cost of energy to Jamaican consumers.

For, as we have consistently argued in these columns, energy is a potential game-changer for the country's economy. Hovering around US$0.40 per kilowatt-hour, the price of electricity, which is a significant part of the cost of domestic production, is entirely too high for Jamaica's industries to be competitive on a global scale.

Get it down by a third, or more, allied with other pertinent policy measures, and our firms, including the alumina refineries, may just have a chance. Mr Paulwell's declared target is for a dip in the electricity rates by up to 60 per cent over the next four years.

This declaration of intent, however, is not yet supported by the full beef of policy, strategy and tactics. Perhaps now that the administration has had a full month in office and ministers have completed their retreats, the energy minister will fill in the gaps.

End to monopoly

Mr Paulwell will, no doubt, point to his Government's declared plan to end the Jamaica Public Service's (JPS) monopoly at the retail end of the domestic energy market. JPS, the minister says, will be allowed to retain ownership of the grid, but competitors allowed access by paying an interconnection fee and by contributing to a universal access fund.

Indeed, Mr Paulwell has charged the three members recently appointed to the JPS board - because of the Government's 19 per cent interest in the company - to take as their primary objective the administration's agenda of "achieving the liberalisation in the light and power sector".

We have arrived at no position on liberalisation. There is an absence in the public sphere of the data on which the Government predicates this policy. Nor has there been a full debate of the issue. We expect that Mr Paulwell will quickly remedy these shortcomings.

There are other issues that arise in the energy programme - not least being the sequencing of policy implementation. For instance, at a recent energy forum hosted by this newspaper, there was consensus among experts addressing the fuel mix that to reduce its dependence on expensive imported oil was the most urgent matter for Jamaica in lowering the cost of energy. In so far as there was a disagreement, it was whether natural gas or coal would be most cost-effective over time.

Clarity on proposed projects

Already, JPS won a tender for the development of 360 megawatts of generating facility based on natural gas, and the Office of Utilities Regulation has put out a request to tender for liquefied natural gas (LNG) storage, regasification and distribution facilities.

There is, in the circumstances, the need for clarity on whether these projects will proceed, and what, if any, part the Government will play in implementing them. Assuming that the projects are to continue, the Government has to assure itself that financial markets are certain of their viability and are, therefore, willing to finance them.

Mr Paulwell, as he addresses these issues, needs to clarify whether the LNG project will run parallel with liberalisation, the development of coal facilities, and the introduction of petcoke.

The administration has much to do and a tight window within which to accomplish them. He needs to be smart about it.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.