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Not cheap enough - Gov't still searching for other energy source as LNG remains too costly

Published:Friday | November 30, 2012 | 12:00 AM

Arthur Hall, Senior News Editor

The Government is exploring the possibility of an energy source cheaper than liquefied natural gas (LNG) as it tries desperately to cut the cost of electricity to Jamaicans.

At the same time, the administration has no intention of abandoning the plan to have the Jamaica Public Service Company (JPS) introduce LNG through its soon-to-be-built plant in Old Harbour, St Catherine.

Sources close to the energy ministry yesterday told The Gleaner that other energy sources were currently being considered as LNG prices remain above what would make the cost of electricity to Jamaicans significantly cheaper.

Paulwell off the island

With Energy Minister Phillip Paulwell off the island on government business, the sources said there would be no official comment until he returns but claimed the proposal now on the table could see Jamaicans paying much less for electricity.

The energy ministry sources were responding to a late evening release from the Jamaica Manufacturers' Association (JMA) about the Government's decision, which has yet to be officially announced, to abandon the long-proposed LNG deal with Trinidad and Tobago.

According to the source, who requested anonymity because he was not authorised to speak on behalf of the ministry, the new plan being considered could be a winner for Jamaica.

"Several major users of electricity are excited about this proposal," said the source, who was quick to point out that the discussions were in an embryonic stage.

Yesterday, the JMA noted that it had been advocating for years for the supply of LNG from the twin- island republic at preferential prices to create a level playing field for Jamaica's manufacturing sector.

"We supported the Government when they signed a memorandum of understanding with Trinidad for the supply of 1.1 million tonnes of LNG and came out against Trinidad when they reneged on the deal," said the JMA.

"Since then, we have been in discussions with three different industry ministers, from Karl Samuda to Christopher Tufton and to Anthony Hylton in a bid to reduce the cost of energy," added the JMA.

Trinidad deal was key

The manufacturers group argued that the supply of LNG from Trinidad was a key strategy in the provision of a cheaper source of energy from the JPS. The JMA also demanded answers from the Government as to whether it was no longer pursuing LNG from Trinidad.

The JMA also questioned if another source of LNG had been identified to supply cheaper energy to the manufacturing sector and the Jamaican people and what was the plan to enable manufacturers to compete with goods coming in from Trinidad.

"We are disappointed that there have been no discussions with the JMA, as the advocacy body on the LNG issue, and await a response from the Government which will make sense to the manufacturing sector and the citizens of Jamaica."

Paulwell is scheduled to return to the island in early December in time for a meeting where it is expected that a decision will be made.

Late last week, it was announced that investors in renewable-energy projects would be able to bid for up to 115MW of electricity-generating capacity through a request for proposals (RFP) process.

The Office of Utilities Regulation issued the RFP on Monday, opening up the process to potential investors in large or small renewable-energy installations.

Desperate to get cheaper electricity prices, Paulwell said the Government has been making steady progress in encouraging renewable-energy investors.

He said the Government cleared the way for the investment in renewable energy by rescinding the Petroleum Corporation of Jamaica (Extension of Functions) Order, which gave it the exclusive right to develop those projects locally.