JPS backs LNG plan
Published:Friday | July 16, 2010 | 12:00 AM
The Jamaica Public Service (JPS) is backing the government's move to replace heavy fossil fuels with liquefied natural gas (LNG) as the country's main generating source for electricity, which it says could mean cheaper electricity for consumers, overtime.
The company is also pleased to see movement on the project after a decade of planning.
"It's been almost like 10 years Jamaica has been discussing introducing LNG or coal - nothing happened," Tomofumi Fukuda, chairman of the monopoly provider said at the company's AGM on Tuesday.
"We had to take immediate action, and from that perspective I have to commend the government on the leadership to bring LNG."
Fukuda said it is difficult to say which of the two would be the cheaper alternative for power production, LNG or coal, but noted that based on Jamaica's immediate need for diversification, LNG is the better option to pursue at this time.
"The best option, however, depends on the initial investment amount. Normally, coal facilities are much more expensive than LNG-generating facilities," he said.
"On the other hand, coal is cheaper than LNG as fuel, but the gap between gas price and coal price as fuel has gotten smaller these days, and this tendency could continue considering recent discoveries of gas fields worldwide."
Jamaica is negotiating with a Belgian-led consortium to develop LNG infrastructure here that will supply gas to, among others, JPS for partial replacement of oil for the generation of electricity.
The Exmar/Promigas/CLNG Jamaica partnership is expected to build, own and operate a floating storage and regasification unit, an estimated investment of US$600 million.
Jamaica hopes to save US$350 million on its annual oil bill, and drive down the cost of electricity by 30 per cent in the process.
But JPS, which is majority owned by Marubeni of Japan and TAQA of the United Arab Emirates, would not be drawn into projections of possible savings, stating that a study on the matter is yet to be done.
Fukuda said the utility is focused on improving its services, in order to grow demand.
The company is focussed on boosting revenues, which in 2009 stood at US$42 million.
"Because of the recession, our returns are not big, even our 2009 number is not where we projected when we acquired JPS ... and we had very poor performance in 2007-2008," said Fukuda.
"We definitely need something more."
The JPS chairman said performance high points for the company since the acquisition was a curtailment of nationwide power outages since January 2008, and the success of the loss-reduction exercise.