EDITORIAL - Drop the Exmar agreement

We are always cautious to recommend or support, in the absence of negotiations, the abrogation of contracts, especially on the part of governments involving commercial agreements that have been entered into by the parties in good faith.

Our position rests primarily on two planks.

First, we appreciate the power of the State and its potential for abuse, to the detriment of private citizens, by fickle politicians and overreaching bureaucrats, even with the availability of recourse to the courts.

Second, business and commerce are best conducted in an atmosphere of reasonable predictability; free of arbitrary behaviour by any party, notwithstanding his/her strength relative to other participants.

But there are circumstances where larger principles prevail and urgent and firm action is required by a government to protect the interest of the public and the integrity of the processes of governance.

While the findings may not have met the threshold of proof, we believe that more than a prima facie case has been established by the Office of the Contractor General (OCG) for such action with regard to the contract for the establishment of a floating storage and regasification unit of liquefied natural gas (LNG), for which a consortium, led by the Belgian firm Exmar MV, was named the preferred bidder.

The idea of the LNG project is of itself commendable: the conversion of Jamaica's more than 90 per cent dependence on expensive oil to cheaper sources of energy.

Indeed, this newspaper has argued that a breakthrough on Jamaica's energy mix could be a critical game-changer required in transforming the competitiveness of the country's sluggish and long underperforming economy. With electricity at US$0.30 per kilowatt-hour for electricity, it is difficult for Jamaican industries to compete effectively with even their regional partners.

No transparency

LNG is a potentially cheaper alternative to petroleum as a fuel source; but it is not the only one. So, this newspaper has made known its concerns about the lack of transparency in how the Government arrived at its decision to move from oil to LNG, and whether other cheaper alternatives - separately, or as a mix - were appropriately considered.

Our question has not been answered. But what the OCG probe into the naming of the Exmar consortium as the preferred bidder for the LNG project found was a "lack of transparency, the absence of fairness, and a glaring demonstration of impropriety and irregularity in the process".

On the face of it, the project leader on the LNG deal at the Petroleum Corporation of Jamaica (PCJ) had a pecuniary interest with Exmar, and his actions and behaviour appeared to favour that company. A former chairman of the PCJ, who is the major partner in a firm that is part of the consortium, seemed to have had inside information on the LNG plans, having, it seems, worked with the project coordinator and Exmar in promoting LNG, even when the then minister was pursuing other policy options.

Indeed, it is not only the OCG which believes this process was tainted. Private legal option, supported by the office of the solicitor general, held that it "could not stand the scrutiny of legal review".

In this regard, we support the abandoning of the agreement and for the administration to use the opportunity to consider a suite of cheaper energy options, including coal. If the consortium believes it was wronged, it can seek legal redress.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.