LNG data still cloudy
Published:Friday | February 11, 2011 | 12:00 AM
Gas might deliver 8% growth by 2030, says PIOJ boss
Mark Titus, Business Writer
After more than two years of aggressively promoting LNG as the fuel of choice to power Jamaica's economy into the future, the Jamaican authorities do not yet have a definitive fix on the level of economic savings that will be achieved from the use of natural gas, a senior technocrat indicated Wednesday night.
Based on the data currently available, Gladstone Hutchinson, the director general of the Planning Institute of Jamaica (PIOJ), suggested the LNG's contribution to driving economic growth could well be modest - perhaps eight per cent over the next two decades.
Hutchinson was among the speakers at a launch of a series of seminars promoting energy conservation and efficiency in the context of the country's planned conversion from expensive oil - which fires more than 90 per cent of Jamaica's energy output - to cleaner and cheaper natural gas.
"LNG may potentially lower the cost of electricity generation, however it is not entirely clear ... that the final effect will be a significant reduction to end-user electricity prices," said Hutchinson, who spoke at the functionahead of Prime Minister Bruce Golding and Energy Minister James Robertson.
Hutchinson said that the PIOJ was now conducting its own analysis on the likely impact of LNG on GDP growth, but for now was working with crude data supplied by the Government's oil refinery, Petrojam.
Based on those figures, Hutchinson told the seminar, the oil agency projected that LNG would yield a reduction in energy costs of 10 per cent in 2013, the year that the Golding administration had initially expected the conversion to be in place.
That would be followed by a reduction of 20 per cent in 2014, and 20 per cent in each year between 2015 and 2030. Hutchinson called those labelled those expected outcomes "modest".
In past statements, government officials, including Robertson, had indicated a drop in electricity rates of between 30 and 40 per cent with the introduction of LNG.
In fact, Robertson had the 30 per cent figure in his text prepared for delivery Wednesday night, but did not mention the figure when he spoke.
Hutchinson said that the PIOJ had used the Petrojam figures for initial analyses on the effect LNG would have on Jamaica's economic performance under its Vision 2030 projection - a plan to transform the island to developed-country status over the next two decades.
Said Hutchinson: "What we found is that in 2014 the sum total the benefit ... would be an addi-tional 1.3 per cent of GDP, and by 2030 to total benefit would an additional 7.3 per cent of GDP.
"In other words, we would average 0.4 per cent points of addi-tional GDP over the 2013 to 2030 period from implementing [the LNG project] based on the numbers we get from Petrojam."
Substantial gains from energy conversion, he said, could come from households and business having confidence that lower prices would be permanent, thus encouraging them to invest in plant modernisation and less labour-intensive production.