THE GOVERNMENT has agreed to sell 80 per cent of its shares in the Jamaica Public Service Company (JPSCo) to United States firm Mirant Energy Inc. for about US$201 million.
The announcement made in the House of Representative yesterday by Prime Minister P.J. Patterson in a statement, fulfills a commitment made by the Government in April to finalise the deal in order to fill the gap in the 2000/2001 Budget.
Mr. Patterson said Mirant was the new name for Southern Energy Inc. but in his speech it was also named as a subsidiary of SEI.
The deal was approved by the Cabinet on Monday and is expected to be approved by the Mirant board this week. The sale should be consummated by the end of March.
Mr. Patterson said if things remained as they were, and there were no material changes in the position and assets of the company, it would earn US$201 million from the sale.
The company will continue to operate as the JPSCo under a 20-year licence to be issued by the Minister of Mining and Energy. The licence will not provide for a guaranteed rate of return. The Government will, in time, list its shares on the stock exchange.
Mr. Patterson said the Govern-ment believed the sale agreement would enable the JPSCo to meet the growing demand being placed on it for improved, reliable and cost effective service. Mirant will invest about $500 million in upgrading the company's generating capacity.
He listed key elements of the sale as:
The short-term debt of US$120 million would remain with the JPSCo. The Government would, however, maintain the existing guarantees for up to one year of closing.
The Government, as the minority shareholder, would have three of the nine representatives on the board.
The shareholders may be required to make additional capital contributions.
Within the first three years of the agreement neither party will be allowed to transfer any portion of its ownership interest.
The Government or its designee will be allowed to assume operation of the JPSCo and the power system, temporarily, if the buyer ceases to operate all or any substantial portion of such system for a specified period.
All non-related JPSCo properties will be reverted to ownership by the Government of Jamaica after six months.
