I would do it every day and twice on Sunday – Vaz

Defending the decision to lend the Jamaica Public Service Company US$150 million towards its early restoration efforts following Hurricane Melissa’s devastation, Energy Minister Daryl Vaz has shrugged off criticisms, labelling them as “misinformation and noise”.

Addressing yesterday’s post-Cabinet press briefing at Jamaica House, Vaz again defended the Government’s decision, saying he was confused by the criticism.

The decision to make the multimillion US dollar loan to the privately owned JPS has been widely criticised and the subject of fiery parliamentary sittings.

Marubeni Corporation, a major Japanese trading conglomerate, and Korea Electric Power Corporation, South Korea’s largest electric utility company, own the majority stake in JPS, with the Government of Jamaica being a minority owner.

However, the energy minister is again insisting that without the five-year, five per cent interest rate loan, some of the most brutally hit areas would remain in the dark for up to June of next year.

Melissa destroyed critical infrastructure as well as downed thousands of poles and wires across the western belt of the island, where the hurricane made landfall.

Finance Minister Fayval Williams also faced questions about the loan during Tuesday’s Standing Finance Committee meeting;and yesterday Vaz reiterated that the decision was recommended by the Ministry of Finance and approved by the Cabinet “to fast-track restoration from 82 per cent now to 90 per cent by Christmas/New Year and 100 per cent by January”.

In the immediate aftermath of the October 28 hurricane, 170 linesmen arrived in Jamaica to help with the mammoth task of restoring electricity to main towns as well as hard-to-reach areas, and Vaz says the loan means that number will be increased.

“That would mean taking on 300 additional linesmen on top of the 170 that are here now. Without that money, the 170 linesmen would have been decommissioned this week, meaning ... they would have to leave because there would be no funding to pay them. So, the US$150 million goes towards keeping those 170 linesmen in Jamaica and adding another 300 linesmen. That comes with the equipment, the trucks and all that you see currently on the road that those 170 linesmen are doing.”

A MATTER OF RESPONSIBILITY

The Government has also faced questions about making the loan to JPS when it had already declared it will not be renewing its licence.

“That loan is without us having to give any extension on the current licence. This minister and this Government made a commitment to the people of Jamaica that the licence that expires in 2027 would not be renewed on the same terms, which we all know and agree that the licence is 25 years old. It was flawed from day one, and it is even more flawed based on the time that has elapsed and what the energy landscape does now. So, in order for us not to grant the 15 years that was asked for by JPS and the eight to 10 years that the multilaterals asked for to fund the JPS, we decided to be a responsible, caring government and lend the US$150 million for five years with simple terms - 5.5 per cent, which is very concessionary, because we don’t want a pass-through for increased bills because of interest rates, so we were mindful of that.”

The Government has been at pains to stand by its pre-hurricane decision in the face of JPS’s struggle to obtain funding with its licence.

“It allows us to continue on the track to negotiate a new licence with JPS or with whoever. So, we have separated Melissa from what we were on track to do pre-Melissa. And I can say to you, if in two years the JPS is successful in negotiating a new licence, they’ll be able to raise capital and repay the US$150 million. If they don’t, the Government has already indicated that in June of this year, rather than giving them an automatic 10-year extension [due to] non-response by the Government, we indicated to them that we were not prepared to renew the licence on the same terms and therefore, if necessary, we would be prepared to acquire the assets of the JPS. So, our US$150 million is secured either way.”

UNCERTAINTY FOR SHORTFALL

Vaz, however, conceded that some of the opposition to the loan was based on the uncertainty on where the JPS would obtain the shortfall between what it says it needs to fully restore electricity and the government loan.

“The original estimate was US$480 million to US$600 million. It has been revised down to US$350 million to US$400 million. The US$150 million that we are lending them was not picked up out of a hat. They told us they needed US$75 million a month for two months to bring us to full restoration. So, yesterday (Tuesday) in Parliament, again the noise and the mischief about the fact that ‘the US$150 million is not enough, where is the other US$200 million or US$250 million coming from?’ That’s not a discussion that we have had with the JPS. We have had a discussion about a US$150 million [loan]. The JPS is owned [by a] majority privately, so the Government has no obligation to fund a private entity. We did so in this case because of the benefits, and therefore we have nothing in front of us either to qualify at this stage the amount or the final assessment of the amount of money that Melissa has caused [in] damage to JPS. We don’t have it from the JPS and we don’t have it from the OUR (Office of Utilities Regulation), so I can’t speak to any other figure other than what is out there. Secondly, there is no proposal in front of us for any additional money outside of the US$150 million, so I want to make that very, very clear.”

During last week’s meeting of the Public Administration and Appropriations Committee, OUR Director General Ansord Hewitt and Deputy Director General Cedric Wilson admitted to being unclear about critical details of the Government’s loan to the JPS.

Hewitt and Wilson, in responding to questions posed by committee members, also revealed that at that time the JPS had not told the regulatory body how it would fund the shortfall between what it actually needs for full restoration and resilience and the government loan.

karen.madden@gleanerjm.com