Paulwell's pipe dream?
Published:Sunday | February 5, 2012 | 12:00 AM
50-60 per cent energy cost reduction in four years 'unrealistic'
Gary Spaulding, Senior Gleaner Writer
An ambitious forecast by Phillip Paulwell, minister of science, technology, energy and mining who calculated that the energy cost to consumers could dip significantly in four years, has failed to generate support of senior technocrats who sat in a Gleaner Editors' Forum last week.
Former head of the Office of Utilities Regulation, Winston Hay, was among the group of technocrats who described as unrealistic the scenario painted by Paulwell that this would serve to lift the Jamaican economy out of the doldrums.
"I don't see how it would be possible to reduce the cost to the consumer to the extent to which Minister Paulwell has suggested," he asserted.
"Until we can do something about fuel, I don't see any action that can be taken to produce that kind of reduction in the cost of energy to consumer that the minister speaks about. Even if it is fuel, I think that that percentage reduction would be very difficult or impossible to achieve," Hay argued.
Soon after being assigned the energy portfolio last month, Paulwell, based on his calculations, had declared that in three to four years, Jamaicans could see the price of energy to consumers falling between 50 and 60 per cent.
He predicted that energy peak consumption would be up to 1,000 megawatts, from 630 megawatts, and the cost of electricity would be about 17 cents per kilowatt-hour with the use of coal and petcoke. This would slash the cost of electricity to between US$0.15 and US$0.18 per megawatt-hour.
Asked whether Paulwell's forecast was credible, Hay pointed to the Jamaica Public Service's audited financial returns which indicated that more than 60 per cent of its operating expenses are fuel. "I don't see how it could be possible to reduce the other operating costs, which are less than 20 per cent of that," he argued.
Hay said the Government continues to talk about reducing fuel cost by using liquefied natural gas (LNG) as its fuel generation. This he said has been promised to Jamaica from the late 1990s. "There are no positive indications that we are any further towards having LNG as the economic fuel than we were then," he argued.
Other members of the panel included Dr Carlton Davis, former chairman of the Jamaica Bauxite Institute; Dr Maurice McNaughton, Mona School of Business (MSB); Dr Charles Douglas, director of the Jamaica Productivity Centre; Joseph Matalon of the Jamaica Productivity Centre; Dr William Lawrence, director, MSB and Claude Robinson, director, MSB.
compete regionally
"I believe that coal is the more economic fuel for energy generation in Jamaica; I have never seen a study which indicates that LNG is the more economic fuel," Hay told The Gleaner forum.
Asked if anything could be done to make Jamaica competitive with its regional counterparts, Matalon stressed that it was nigh impossible to compete with oil-producing neighbours Trinidad and Tobago.
"I think it is generally recognised that one of the main costs of energy is the inhibitors to growth in Jamaica because growth comes as a result of production and one cannot produce effectively and efficiently with the fuel at 40 cent a kilowatt-hour when Trinidad is selling energy at five cents a kilowatt-hour," he contended.
Noting that the single largest input in the process is the cost of the fuel, Matalon said "coal has been advocated by a number of us for the last 12 years ... The World Bank has been promoting the disuse of coal."
However, Matalon suggested that the World Bank appeared to be softening its position. "Charles Douglas and I had a meeting with them two months ago and they say they are at this time relooking at their position on the use of coal in countries like ours."