EDITORIAL - The PM has one choice

 Prime Minister Portia Simpson Miller has an urgent decision to make. And she has only a single option.

She must, as this newspaper has advised, and private-sector leaders have reinforced, demand of her energy minister, Phillip Paulwell, that he rescind the licence granted to Energy World International for the development of a 381-megawatt, gas-fired electricity generating plant.

The prime minister must, with the help of competent experts, who she is likely to have to recruit from outside of Jamaica, bring the energy project under her personal and direct supervision.

Then, Mrs Simpson Miller, using a transparent, but fast-track method that is in concert with the country's procurement rules and is supported by our international partners, re-enter the market with this project that is so crucial to Jamaica's economy.

The prime minister has been placed in this invidious and inextricable position because of the incompetence with which the Office of Utilities Regulation and the energy ministry have attended this project, including presumed rational people making inexplicably irrational decisions.

Further, her urgent action is necessary, in part, to salvage Jamaica's reputation as a place where people who invest can expect fair play and predictable arrangements, rather than public officials playing fast-and-loose with procurement systems.

This newspaper finds no pleasure in pointing the prime minister to this course of action, but the situation - including deepening concerns about the ability of EWI to deliver the project, and the circumstances by which we got here, make them inevitable.

As is universally agreed, electricity at US$0.42 per kilowatt hour (kWh) is a burden to Jamaican firms and the competitiveness of the economy. In the circumstance, it is easy to have been sympathetic to Mr Paulwell for facilitating the consideration of EWI's bid after the procedure had begun. However, the Office of the Contractor General said that the way EWI was grafted on to the process was wrong.

The Inter-American Development Bank says the bidding process was inconsistent with its own "internal procedures and policies". It can't lend to the project. Other multilaterals can be expected to follow suit, thus raising the risk premium on the project. It will be difficult in the circumstances for EWI to maintain its promise to deliver electricity at 12.88 US cents per kWh.

CONSTANT MURKINESS

This situation is bad enough. But there is the continued murkiness around EWI; it has been reticent about its shareholders; about its annual accounts; it has equivocated over its capacity to deliver natural gas, including whether it has export permits from Indonesia where an associated company owns gas fields. It has been less than forthcoming about its plans to finance the project. At the same time, EWI failed to meet the deadline to pay a $36.8 million performance bond.

While we appreciate that some of these requirements are not yet due under the licence that was granted to EWI, we expected that in the environment of doubt, the company would have wanted to bring clarity and build confidence in its capacity to deliver.

Some will, perhaps, argue that in the situation the government should move to the next bidder on the list. But their cost of electricity at 50 per cent higher than EWI's will not encourage a competitive economy. In any event, the process is too fundamentally flawed to proceed on the existing basis.

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.