EDITORIAL - Gov't must come clean on LNG

It is high time the Simpson Miller administration end the pussyfooting and come clean on the liquefied natural gas (LNG) project. For its policy-by-dribble is both confusing and confidence-draining and risks doing grave damage to the Jamaican economy.

First, let us place things into perspective. It is our view that alongside credible fiscal policies - which, hopefully, are being sorted out in current negotiations with the International Monetary Fund (IMF) - energy is the potential economic game-changer for Jamaica.

With the domestic price of electricity at upwards of US$0.41 per kilowatt-hour, Jamaican firms are difficultly placed to effectively compete with hemispheric and global manufacturers and service providers. Indeed, the higher price of energy has been a significant contributor to this country's long period of anaemic advance in GDP.

A substantial part of our problem, of course, is that the bulk of our electricity is generated by old, inefficient power plants that burn expensive oil. Changing the fuel mix, therefore, is a critical component towards reducing the cost of domestic energy.

Settled on natural gas

For more than a decade, Jamaican administrations have deliberated on the issue and appeared, in the end, to settle on natural gas as the fuel of choice.

It is largely against this backdrop that the former Jamaica Labour Party administration, after a badly compromised initial tender process that it was forced to overturn, called for new bids for an LNG storage and regasification facility to begin to give effect to the fuel-conversion programme. Months ago, it was announced that Samsung was the preferred bidder for that facility.

Previously, the Jamaica Public Service Company, an electricity generator and monopoly distributor of power, won the bid to establish a natural gas-burning, 480-megawatt power plant. The expectation was that with natural gas and enhanced efficiency, this facility would drive down the cost of power by a third - not sufficient, but a start.

This newspaper has always felt, and argued, that coal, and other fuels, ought to be part of the energy mix. Our primary concern is for the delivery of the cheapest power to afford the economy a fighting chance at competitiveness. At the same time, we want to be assured of a predictability of supply, starting with the fuel.

Project could be sidelined

Unfortunately, the Government's poor communications strategy is injecting grave uncertainty and potential partisan rancour into the discourse.

Dr Carlton Davis, the highly respected public servant who heads the Government's energy task force, had hinted that the LNG project could be sidelined if the Samsung bid did not meet specific price points for the delivery of electricity. It has for weeks been leaking out that those price points, whatever they were, have not been met and that LNG might be abandoned.

What, precisely, this means remains unclear. We would, for instance, wish to be told frankly whether Jamaica can find no supplier of LNG - the price of which has risen on the back of demand in Asia despite the collapse of the price of natural gas in North America - at a cost that makes sense. Or whether it is other elements of the pricing of the project that don't compute, and which party they relate to. Or, perhaps there is another approach to the project, including a mix with other fuels.

Uncertainty, ultimately, breeds apathy.

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