Tue | Sep 22, 2020

Nigel Clarke | No, Mark Ricketts, you are wrong

Published:Tuesday | November 5, 2019 | 12:00 AM
Nigel Clarke

I would like to clarify several matters stated in the column ‘Please, Mr Holness, do not sell JPS shares’, written by Mark Ricketts, which was published in this week’s Sunday Gleaner, as it relates to the Jamaica Public Service (JPS).

I will address the concerns on a point by point basis, as outlined below:

1. Mr Ricketts stated: “Last year, when the Government owed JPS $9 billion for unpaid street lights, Holness contemplated selling our ownership investment to pay off the debt. Thank heavens he didn’t.”

This is not entirely accurate. The Jamaica Information Service reported that Minister Audley Shaw, in responding to a question in the Standing Finance Committee, voiced this as an option at the time. To make a personal attribution to Prime Minister Andrew Holness is inaccurate when you have information as to where and when the possibility was mentioned. This is easy to find with a web search.

2. Mr Ricketts wrote: “Now he intends to sell our equity shares soon, and, I suspect it is to help finance the recently announced multibillion-dollar supplemental (sic) Budget.”

This assertion is theoretically impossible. The qualifier ‘suspect’ does not mean that you can follow it up with impossible and non sequiturs. Furthermore, it is false. The Supplementary Budget was financed by additional revenues and a reallocation of expenses.

3. He then stated: “… having replaced more than 50 per cent of its generating capacity, as well as substituting natural gas for petroleum.”

JPS did not “replace its generating capacity”. The facts are that JPS retired 100 per cent ownership of 292MW of HFO-fuelled plants (which, indeed, is near 50 per cent of its generating capacity) and will replace this with 51 per cent ownership of a 190MW LNG-fuelled plant. JPS did not have the capital to replace the generating capacity on its own. The fact is that JPS, therefore, has effectively reduced its generating capacity.

4. Mr Ricketts said: “I would take a bet that neither the Japanese nor Korean owners would get rid of any of their shares, yet our prime minister seems antsy in selling our valuable asset. Why would the Japanese and Koreans not sell any of their ownership interest while we can’t wait to sell ours?”

On what basis is this assertion made?

5. He further stated: “Owners of such utility companies, which are monopolies, with a strong balance sheet, do not readily divest their assets.”

How does Mr Ricketts then explain the many publicly traded monopoly utilities with strong balance sheets around the world? Mr Ricketts can have an opinion that the Government of Jamaica (GOJ) should not divest, via the Jamaica Stock Exchange, the 19.9 per cent of JPS that the GOJ owns, but his argument should not be based on the false suggestion that we would somehow be an exception.

6. Mr Ricketts also said: “If the Government is in need of money to fund its supplemental (sic) Budget, start hiving off the nearly 200 agencies, companies and corporations it owns … .”

This is setting up a factually false and theoretically impossible premise. The Supplementary Budget was financed by additional revenues and a reallocation of expenses.

7. Finally, in the section under the subheading ‘NOT PETROJAM’, Mr Ricketts gives the false impression that divestment via an IPO on the Jamaica Stock Exchange would lead to a scenario where there would be no Jamaican director on the board. This is obviously false. He bases a substantial amount of his argument on the value that Jamaican directors on JPS’s board can bring. Well, what are the facts here? On an IPO, the public Jamaican shareholders would have the Jamaican directors on the board as currently exists today.

Dr Nigel Clarke is the minister of finance and the public service and member of Parliament for St Andrew North Western. Email feedback to columns@gleanerjm.com