EDITORIAL - Back to market with energy project

We have heard nothing, neither from the Office of Utilities Regulation nor the energy minister, Phillip Paulwell, that causes us to alter the positions declared yesterday regarding the future of the 381MW electricity-generating project, for which a licence was granted to Energy World International (EWI).

So, we repeat our call for the Government to:

Rescind the licence;

Exercise its forfeiture of US$7.37 million bid bond that was posted by the company and its then declared partner, Pacific Energy;

Bring the project to the Office of the Prime Minister and under the direct oversight of the head of the government; and

Start afresh the process for choosing a new licensee that is fully transparent, is clearly within the Government's procurement rules and has the endorsement of critical partners such the Inter-American Development Bank (IDB) and the World Bank.

But even as it meets these criteria, with the help of skilled technicians who may have to be recruited from abroad, the Government must ensure that the arrangements proceed with urgency.

NECESSARY STEPS

These actions, we believe, are necessary partly because of the failure of EWI to meet last Friday's deadline for posting its five per cent bid bond, or US$7.37 million performance bond; the murkiness that persists over the licensee's capacity to complete the project and deliver electricity at the agreed price; and more important, the disrepute to which Jamaica has been brought as the place to invest, given the IDB's rejection of the bidding process from which EWI ultimately emerged the winner.

Indeed, the IDB's stance could cause serious investors to be wary of Jamaica, weaken the country's nascent economic recovery and undermine growth.

Of course, this newspaper appreciates the need to significantly lower the cost of electricity if Jamaica is to have a decent chance to build competitive firms and, ultimately, a competitive economy. It is in that context that we sympathised with Mr Paulwell's intent when he sought to join an already-commenced process for choosing a firm that would, hopefully, deliver cheaper energy.

CLARIFICATION NEEDED

However, the contractor general held the process by which EWI was accommodated as in breach of the Government's procurement policies. The IDB does not believe it was in keeping with theirs.

Nor has it helped that EWI, which became the top candidate when the initial bidder selected could not post its bid bond, is far less than transparent in how it does business. Little is known of its ownership and organisational structure, its financial arrangements, and whether it has clearance to export natural gas from Indonesia, where it is reported to have gas fields, to fire the proposed Jamaican power plant. Moreover, little or nothing has been heard of its presumed partner, Pacific LNG. These issues are in need of clarification.

Further, the IDB's stance and likely absence of the funding and imprimatur of other multilateral financial institutions will raise the risk premium on this project and, in all likelihood, make it impossible to deliver electricity at the 12.88 US cents per kWh promised by EWI.

Some would expect that a disqualification of EWI/Pacific LNG would mean the elevation of the next in line, Energise Jamaica. But their proposed price of power, at 50 per cent higher than EWI's, won't do for Jamaica. In any event, the Government could not proceed on the basis of the process that the international community deemed was flawed.

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.