EDITORIAL - LNG beyond Mr Megginson's contract

THIS NEWSPAPER is not, at this time, particularly taken with Mr Chris Zacca's decision to retain Mr Ernest Megginson as the point man on the government's liquefied natural gas (LNG) project, or the fact that he is being paid US$426,000 for the job, which Mr Zacca says represents "value for money".

That aspect of Mr Megginson's contract will, if required, be subject to appropriate public scrutiny, to which, we believe, neither Mr Megginson nor Mr Zacca would have objection, appreciative as they are that the bill is that of taxpayers.

Our immediate concern is the lack of clarity in our own mind - and we expect the wider public - about what project Mr Megginson is intended to manage, given recent developments in Jamaica's programme to convert from oil to LNG as the country's major energy source.

To put it baldly, the public needs to know if the Golding administration will follow the recommendation of the contractor general, Mr Greg Christie, to scrap the agreement that named a consortium, led by Belgium's Exmar MV, as the preferred bidder for the establishment of float storage and regasification unit for Jamaica's LNG programme.

The answer to this question is what will necessarily dictate the scope of the work that Mr Megginson has to undertake, against which fair value for money can be determined.

Scrap Exmar contract

For the record, this newspaper repeats its support for Mr Christie's recommendation for the scrapping of the Exmar contract and for the retendering of the LNG facility, assuming that is the route, after careful consideration, Jamaica wants to pursue.

Given our support for the sanctity of contracts and appreciation of the need for business to be conducted in a relatively predictable environment, this is not a position at which we arrived lightly.

The report on the LNG deal establishes, if not a compelling, a prima facie case of conflict of interest and insider-dealing that prejudiced the bid in favour of Exmar.

It seems incontrovertible that:

● the then project manager had a pecuniary relationship with Exmar;

● that a former chairman of the vehicle used by the Government to advance the LNG project, Petroleum Corporation of Jamaica, is a major stakeholder in a company that is part of the Exmar consortium;

● that the ex-chairman and the project manager had not only promoted LNG, but engaged in behaviour that to the objective observer would appear to predispose them to Exmar;

● that a potential bidder was excluded from the process;

● that the project manager and others who could reasonably be claimed to have conflicts of interests were involved in the evaluation of the bids.

That these factors compromised the process was the view not only of the contractor general. Indeed, the firm Livingston Alexander and Levy, in an opinion to the committee headed by Mr Zacca, held that it could "not withstand scrutiny under legal review".

We, however, believe that it would not be enough merely to scrap the Exmar agreement and call for new expressions of interests. The unfortunate debacle provides an opportunity for a full, frank and transparent review of Jamaica's energy mix, including the possibility of using coal, to arrive at genuine least-cost options.

For energy, allied with other appropriate policies, could be the real game-changer for Jamaica's sick economy.

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.