Electrifying politics

Daniel Thwaites

Everybody agrees that the Jamaican consumer is being savaged by the high cost of electricity from petroleum-fired power plants. Everyone agrees that the high rates make Jamaican industry uncompetitive.

Everyone agrees that the consequent desertion of industry and job losses have been a primary driver of economic malaise, personal desperation, familial fragmentation, and social decay. Everyone has agreed for decades that we need to dramatically increase the availability of low-cost electricity, and that it's a cornerstone of any growth agenda. However fiscally disciplined we are (and there's a genuine real effort under way now for the first in forever), we will choke ourselves off if we don't generate additional production.

For Jamaicans, that's actually a lot we all agree on. Still, when the total exports from the entire economy amount to far less than just the 'so-so' oil bill, it could hardly be otherwise. So let's look at this latest bid exercise that has once again failed to make a dent in the energy crisis and has people flaying Phillip Paulwell. And let's begin with some basic back-of-the-envelope calculations, because discussing pennies per kilowatt-hour is deceptive. At the scale of the 381MW energy project, each additional US$0.01 on the cost of fuel amounts to an additional J$3 billion annually to be extracted from ratepayers.

Karl Samuda, who has generally been a voice of reason, noticed a recent "curiously dramatic" reduction in another bid first proffered at around 19c, then adjusted to around 15c with an apparent penstroke. Compared to 19c, when EWI approached the Government with under 13c, that represented an J$18-billion annual savings to the ratepayer, and since we're currently paying over 30c, about J$60 billion annual savings when compared to the present. Criticise Paulwell, but in the context that his effort, if successful, was to return that $60 billion to consumers. Recall the uproar about the $2.25 billion Government needed from the bank withdrawal levy but couldn't get, or else? That's a mere fraction (1/30th) of the $60 billion that Government wanted to save the ratepayer, but now can't, or else!

This tells me that the original bids at 19c had more fat than Oprah in the old days, suggesting an intention to secure the project on a basis other than attractive price point. So EWI's entry at least prevented the Jamaican consumer from getting Boko-Harammed. Further, I deduce that at least part of the uproar, and the expert PR campaign against the collapsed process, stems from a powerful cross-party political lobby salivating at the mega profits that would have been extracted.

Y'see, it turns out that in Jamaica, even the private sector believes in the electrifying politics of wealth redistribution, except they feel it should be from the poor to the rich.

As The Gleaner points out, it would have been irresponsible to ignore EWI. The OCG argues that the process could have been restarted to avoid any hint of impropriety. Fair point! But it's going too far to criticise Paulwell for meeting with EWI which only subsequently submitted a late expression of interest. Anyway, why waste words explaining if and how Paulwell fumbled? The hatchet-men will take care of that. If hot air and character assassination generated electric, we wouldn't need additional capacity. And many of the other criticisms are the inevitable big howls when some other big-man bidder's big food is about to get a big lick off the big table.

Still, lying behind the OCG's turgid report is an inescapable truth: The OUR's process, despite this being the FIFTH time it has sought to acquire this generating capacity, was deplorably messy. There were other problems with the procurement. Not mentioned by the contractor general is that parts of the tender documents appear to have been written by engineers unfamiliar with large project financing, thereby virtually guaranteeing that a winning company would buckle.

Ironically, all acknowledge that if the country had blindly taken almost any comer a decade ago, it would be better off today. Instead, we've been spinning our wheels. Look here, as regular readers know, I sometimes take Audley very seriously, even on the economy. And Audley was absolutely right when he said about the decision to remove EXMAR (OUR attempt #2): "If you ask me for a short list of errors we made in the previous administration, that (decision) was a big one. ... We, the Cabinet approved EXMAR as the preferred bidder and we allowed this nonsense perpetrated by the then contractor general to throw us and derail this programme. If it was not derailed, whether we were in power or not, LNG would be rolling out in Jamaica right now ... ."

The Gleaner noted soon after that Audley was allowing himself some revisionist latitude, because the contractor general had raised legitimate concerns about the process. But Audley is ultimately right. The contractor general is a creature of Parliament, not the boss of it.

Similarly, this administration has allowed itself to be manhandled by a gaggle of unelected noisemakers, none of whom will help me pay my expensive electric bill if I call. In fact, I don't know their carefully guarded phone numbers, and if I go to dem yard, maybe dem set de well-fed dawg or the hungry security guard pon mi.

So I don't see the collapse of the OUR's process as a great victory for transparency and accountability. I see it as a political takedown made possible by a bureaucratic maze where errors are inevitable, and where sectional interests crazed by the prospect of billions have insisted that the best pristine procedure be the enemy of the good outcome. Now we will have had a perfectly transparent process because nothing will have been done.

That's not what I want from the political directorate. They are voted there to endure the cussing, aggrieve the pencil pushers, survive the assassins, and lead. Get this project done already.

Daniel Thwaites is an attorney-at-law. Email feedback to columns@gleanerjm.com.