Hotel, school lockdowns slash JPS revenues
The Jamaica Public Service Company Limited (JPS) is already seeing its bottom line bleed from the economic slowdown caused by COVID-19, costing the power provider hundreds of millions of dollars with the onset of the fallout into its early stages.
Hotels, which have been shuttered amid the downturn in travel as governments restrict incoming passenger traffic to limit the spread of the novel coronavirus, account for a chunk of JPS’s monthly income – $950 million. With bookings having dried up and international travel not expected to resurge for months, the management of the electricity distributor has expressed deep concern.
Responding to queries by The Gleaner yesterday, Winsome Callum, JPS’s director of corporate communications and customer experience, said that the lockdown of schools and universities would also add to the strain on the energy provider’s revenue stream.
Average monthly revenue from educational institutions is roughly $180 million.
Pressed by social-distancing concerns that have made lockdowns a standard response to curbing the outbreak of COVID-19, the Holness administration ordered schools closed on March 13 – initially for 14 days – but extended the shutdown till the end of Easter.
SITUATION TO WORSEN
Dramatic reductions in energy usage at both schools and hotels have led to billing for March falling by up to 60 per cent.
“With other sectors of the economy also affected, we expect the situation will worsen. Note, however, that JPS still has to cover ongoing costs associated with putting in place infrastructure needed to ensure hotels and other businesses have all the power they need when they are fully operational,” Callum said in an emailed response.
JPS said that it would not be considering bill write-offs to residential or commercial customers, citing the COVID-19 outbreak as the trigger of a change in their fortunes, but said that vulnerable groups, including the elderly and disabled, would benefit from bill-payment assistance that would be determined on a case-by-case basis.
The light and power provider is not contemplating short-term layoffs or redundancies at this time, Callum said.
From JPS’s 2019 unaudited financials submitted to the Jamaica Stock Exchange, the company’s operating revenues for 2019 were US$888 million, almost all of which, it said, was used to cover operating expenses of US$868.3 million.
Global turmoil has sparked a plunge in the price of oil, dropping 50 per cent to below US$30 per barrel. On February 29 this year, the price for a barrel of oil was US$59.46.
Callum said that customers would soon begin seeing a reflection of oil’s falling price on their bills.
There will not be a blanket policy applied to customers who may have lost jobs because of the coronavirus crunch, but individual cases will be assessed, she said.
“The customers’ bill-payment history, as well as their current circumstances, will be taken into consideration,” said the communications director, reaffirming the message telegraphed during a digital town hall on Saturday.
“They will be asked to provide supporting documents as needed. The company already has a system in place to manage payment arrangements, which we will continue to utilise.”