EDITORIAL - New approach to energy project

We fear that, allowed to continue as it has been, the proposed 360 megawatts of new electricity-generating capacity will end up in Jamaica's slow-churning legal machinery, with hurtful consequences to the economy and consumers.

It is by now obvious that the Office of Utilities Regulation (OUR), whose incompetence has brought us to this sorry path, ought not to be allowed to continue to manage this process. And neither does the energy minister, Phillip Paulwell, nor the agencies in his portfolio, command the public's confidence to take it on.

It is in that context, therefore, that we support the suggestion, endorsed by Richard Byles, the co-chair of the monitoring committee on the Government's agreement with the International Monetary Fund, for an energy project to now be subject to independent oversight by a group of public- and private-sector officials.

It is important that this committee has clear and objective terms of reference. They should not be limited to legal and technical issues, but ensure that electricity is delivered at the cheapest possible price.

Important, too, this group should not seek to promote the specific interest of any of the existing bidders and attempt to have nationality override economic imperative.

Indeed, a great deal is at stake in this issue, not least the future competitiveness of the Jamaican economy. For, as this newspaper has consistently argued, sound fiscal management apart, significantly lowering the price of energy is potentially the major game-changer for the Jamaican economy.

At near US$0.42 per kilowatt-hour, Jamaicans pay among the highest electricity rates in this region, which weakens the competitiveness of our firms against their counterparts in the hemisphere. Energy is a significant input in the cost of production.

The problem in Jamaica is that the major producer of power and monopoly distributor of electricity, the Jamaica Public Service Company, runs mostly old, inefficient plants that burn expensive oil.

Fiasco after fiasco

The OUR, and the energy ministry, under two administrations, have made a hash of the effort for new investment in power plants to replace and add generating capacity. An initial effort three years ago was abandoned in the face of probable conflict of interest and perceived inappropriate participation in the evaluation of bids on the part of at least one technocrat.

The current effort, the second on this latest phase of the exercise, has been mired in controversy over whether one of the bidders, EWI, should have been allowed into the process after the declared date for interested parties to send in proposals.

This newspaper has great sympathy for Minister Paulwell's wish, and attempt, to widen the competitive basis of the call. It would be a dereliction of his ministerial responsibility not to seek to do so. The approach of the minister and the OUR can only be deemed to have been clumsy and, in the view of the contractor general, breached the Government's procurement guidelines.

This ineptitude from the beginning in the management of the process contributed, we believe, to the failure of a major energy company to bid and the evaluator's doubt about the ability of all existing bidders to finance the project.

Perhaps a new approach, with objective public-and private-sector oversight, can prevent the project being lost in Jamaica's cavernous judicial maze and ensure that it gets done without some entity extracting economic rent from consumers.

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.