JPS Q2 profit slides, avoids monopoly
Published:Friday | August 17, 2012 | 12:00 AM
Power provider, Jamaica Public Service Company (JPS), disclosed depressed quarterly profit of half-billion dollars on Wednesday but avoided accounting for the pending loss of its monopoly status amid court appeals and talks with the Government over securing its exclusive licence.
JPS made net profit of US$5.8 million (J$528m) at second quarter June 2012, down 41 per cent compared to year-earlier levels.
The company's reduced profit resulted from a 44 per cent spike in finance costs to US$12.6 million compared with a year earlier.
Directors Hisatsugu Hirai and Fitzroy Vidal said in a joint note that it was too early to quantify the impact of the Supreme Court decision that set aside JPS's monopoly but did not invalidate the licence.
"The outcome of this court decision, which the company intends to appeal, cannot be determined with certainty at this time and no provision has been made in the financial statements regarding this matter," stated the directors on behalf of the board.
Hirai is chairman of the power utility.
Earlier this week, JPS president and CEO Kelly Tomblin said the company could see its US$450 million of long-term loans placed in default if it loses the legal appeal to keep its all-inclusive licence and if the Jamaican Government refuses to amend the language in the agreement.
But it also means that the financing of the near US$620-million planned natural gas power plant is virtually on hold pending the appeal. JPS' loans were premised on its distribution monopoly arising from its licence, which runs to year 2027.
For the half year, JPS made net profit of US$7 million, or one-third the HY2011 results of US$21 million, despite an uptick in revenue to US$581 million.
Last month's Supreme Court ruling invalidating JPS' monopoly on distribution of electricity was a victory for claimants Dennis Meadows, Betty Ann Blaine and Cyrus Rousseau who challenged the exclusive 20-year licence granted by the then minister of mining and energy to the JPS in 2001.
Electricity charges in Jamaica remains one of the highest in the region due to its reliance on expensive oil, which has tripled in price since 2000.
JPS' fuel bill topped US$407 million at half year, rising by more than 10 per cent year-over-year, but was flat at US$201 million in the second quarter.