Government approves sale of JPS shares
Published:Wednesday | July 20, 2011 | 12:00 AM
Cabinet yesterday officially approved the sale of shares in the Jamaica Public Service Company (JPS) to Asia-based Korea East West Power (KEWP) following initial company announcements in April.
The shares were sold by Japan-based Marubeni, which held 80 per cent of the shares in JPS, the national light and power company. The sale of the shares means that Marubeni and KEWP individually own 40 per cent of the company.
The government of Jamaica owns 19.9 per cent while 3,000 shareholders own the remaining 0.1 per cent of the shares.
"KEWP is expected to significantly improve the operations of JPS," Energy Minister Clive Mullings said in Parliament yesterday.
However, Phillip Paulwell, the opposition spokesman on energy, urged the Government to break the monopoly on the distribution of power. He said the discussions surrounding the transfer of the shares by Marubeni represented the perfect opportunity to pressure the JPS into giving up its monopoly.
But Mullings said if the monopoly was broken it "would offer no real savings or reduction in price to consumers since the transmission and distribution of electricity only accounts for 20 per cent of the cost of electricity".
Outspoken government member Everald Warmington reacted saying, "sadly, what I am hearing is a protection of the JPS." He also protested the intervention of Leader of Government Business Andrew Holness, whom he said was instructed to muzzle him.
In April, KEWP bought the stake in Marubeni Caribbean operations, formerly held by Abu Dhabi-based TAQA, which made a US$7.6-million (J$652 million) profit on the sale of its energy assets in Jamaica and the Caribbean.
KoreaN heavyweight
KEWP is Korea's largest thermal power-generation firm in sales volume and installed capacity, and owns and operates more than 9,500 megawatts of power-generation facilities in Korea.
TAQA's smooth departure was due to it exercising an exit clause with Marubeni, according to previous financial disclosures. The clause absolved TAQA of its share of debt obligations related to the joint venture which stood at some AED2 billion (US$48.2 million) at December 2009, consisting of AED1.1 billion (US$26.5 billion) in long-term liabilities and the remainder in current liabilities.
TAQA recorded net profit of AED311 million (US$84.6 million) for its March 2011 quarter or 29 per cent less than year-earlier levels, while holding total equity of AED16.261 billion (US$4.4 billion).
KEWP is the fourth partner in JPS in a decade. Japan-based Marubeni bought US-based Mirant Corpora-tion's Caribbean-based operations in April 2007 for US$1 billion, including related debt of US$350 million, power purchase obligations of approximately US$153 million and working capital.
The Jamaican Government sold its majority holding in the JPS in 2001 for some US$201 million, but retains a stake in the monopoly power distributor through the accountant general and Development Bank of Jamaica.