EDITORIAL - Fingers crossed on Azurest

Fortuitously, a company other than the Hong Kong-based Energy World International (EWI) has been named by the Office of Utilities Regulation (OUR) as the preferred bidder for a 360-megawatt, gas-fired power plant.

Our hope now is that Azurest Cambridge Power, the firm named by the OUR as the one with which it will initially pursue a deal, is really in a position to conclude the negotiations and move quickly to the construction of the power plant, absent of the drama that has, up to now, characterised this project.

At the same time, we believe that the issues that have attended this bidding process underline the need for a mature debate about the Government's procurement policy, to ensure that investment projects are not stymied even as we guard against public corruption.

Indeed, we are almost desperate that there is no hiccup in the negotiations with Azurest, which would likely mean complications and delays and a continuation of the unsustainable cost that energy imposes on the island's economy.

At more than US$0.42 per kilowatt-hour, the price of electricity in Jamaica is among the highest in this hemisphere. It helps to impede the competitiveness of Jamaican firms and contributes to the sluggish performance of the economy.

Part of the problem for this state of affairs is that the power plants that produce a substantial portion of Jamaica's electricity are old and inefficient. But more critically, they burn expensive oil. This energy project, should it happen, will mean the decommissioning of some of those old plants for more efficient ones that burn cheaper fuels. Cheaper electricity is a potential economic game-changer after several years of little or no growth.

However, this opportunity faces grave dangers, especially if Azurest is incapable of delivering what it promises. For, should Azurest falter and the OUR move on to the next-rated bidder, the likelihood is that the process will again become mired in controversy and delay. That would not be good for the economy.

EWI problem

The issue here is that EWI would be the company that is next in line. It is also the one that Contractor General Dirk Harrison says, in a report issued this week, should be excluded from the process.

Azurest was not among the companies that the OUR described as unsolicited bidders for the generating plant. The contractor general labelled the initial firms as ones that had given expressions of interest.

The problem is that EWI's bid, facilitated by Energy Minister Phillip Paulwell, was submitted, and entertained, by the OUR at the last minute - and, according to the contractor general, without other, new potential bidders knowing of the extended time for submitting entries.

The contractor general's conclusion, therefore, is that Mr Paulwell improperly imposed himself on the bidding process, undermined the independence of the OUR, and that EWI gained an unfair advantage. We make no comment on these conclusions.

However, the EWI bid came to the Government's attention at the last minute, it would have been irresponsible of Mr Paulwell, given how critical cheaper energy is to the economy, not to attempt to have it considered. We do not have the answer to how this should have been done. We, however, do not believe that the economic context was sufficiently addressed by Mr Harrison.

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.