Jamaica Public Service (JPS) sets US$209m borrowing target

Secures US$60m from PROPARCO

Jamaica Public Service Company (JPS) says it will borrow up to US$208.7 million from various sources to finance the company's capital projects this year, which include renewable energy, upgrade of existing plant, fighting electricity theft, and correcting system losses.

The power company has secured most of loans already, including a US$60.5 million agreement inked on Thursday with the French Development Finance Institution (PROPARCO).

Its other sources of debt financing emanate from the Japan, Canada, and the United States, giving it, the utility said, "access to attractive loan terms which will enable them to reduce cost of funding, while converting very short-term loans to long-term loans - in keeping with the long-term nature of its business."

Of the total targeted borrowings - which convert to J$18b - a US$98.2 million loan is being provided by Nippon Export and Investment Insurance and Citibank Japan. This loan facility will be available for a two year period with semi-annual repayment over ten years.

The rate of interest on the loan was not disclosed.

The US$60.5-million facility signed off on Thursday in Kingston by JPS president and chief executive officer, Damian Obiglio and PROPARCO Deputy Chief Director Jerome Bertrand-Hardy, is similarly is to be repaid over a similar 10-year period, but with the company given only up to a year in which to access the loan funds.

Speaking at the signing ceremony, Obiglio said that the funds would go towards capital projects to be implemented between 2011 and 2012.

hydroelectric plant

"Our new 6MW hydroelectric plant, which is being constructed in Maggoty, St Elizabeth, will be one of the key projects to be financed by the loan," he said.

"There is an alignment of the objectives of both JPS and PROPARCO - renewable energy and the reduction of electricity theft," noted Bertrand-Hardy.

Last December, the JPS also secured US$30 million of long-term financing from IFC, the arm of the World Bank that provides funding to the private-sector companies.

A portion of the IFC money is to fund upgrades to limit system losses, with the remaining going into wind renewable energy generation.

The JPS is engaged in wind energy generation at Munro in St Elizabeth.

In the meantime, loss-reduction programmes, the utility company said, would focus especially on areas with high levels of electricity theft.

For the IFC loan, the JPS has been given a 10-year, semi-annual repayment plan.

Another of the JPS's financing partners is Export Development Canada (EDC), from which it has managed to source approximately US$20 million in loan funding.

The JPS will be using the loan from EDC to finance the purchase of Canadian goods and services.

The loan is to be repaid over five years and will be made available to the company for up to two years.

While the JPS declined to say which funds they have already drawn down on, the company states approximately US$100 million of the total will be accessed within this year.

The utility's subscription to new debt capital comes behind the exit of its equity partner TAQA, which last month, shed its Caribbean holdings.

JPS' added borrowings will double its long-term debts, which are currently valued at US$292 million.

sabrina.gordon@gleanerjm.com