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No more money! - European Union walks away from ESCO project

Published:Friday | September 4, 2015 | 12:00 AMErica Virtue

The European Union - the largest financial contributor to the energy services company (ESCO) in Jamaica - has cited delays, failed objectives, and a low consumption rate of the funds as reasons why it has walked out on the project designed to increase public awareness of and provide opportunities in the energy industry.

The Sunday Gleaner understands that despite a near end to the public information campaign programme, documents which should have been provided to stakeholders were only just being sent.

Those stakeholders include the Planning Institute of Jamaica (PIOJ); the Development Bank of Jamaica; the Private Sector Organisation of the Jamaica; the Petroleum Corporation of Jamaica; and the Ministry of Science, Technology, Energy and Mining.

The EU, disappointed that the objectives of the programmes were not being met and that there was a low drawdown on funds provided, saids it would honour existing contracts but would not finance new ones.

Jesus Orus Baguena, head of cooperation for the EU Delegation to Jamaica, Belize, The Bahamas, Turks and Caicos Islands, and The Cayman Islands, said the EU contribution to the project was €431,854 (approximately J$57.3 million), which came from the EU energy facility.

The EU's contribution was 75 per cent and the Government of Jamaica's contribution was 25 per cent (J$9 million). The total cost of the programme was €576,546 (J$66 million).

The Sunday Gleaner was told that a significant part of the expenditure to date has gone into salaries, allowances, and purchases of high-tech devices for the programme.

Auditor General Pamela Monroe-Ellis conducted an audit of the programme, but reports on the findings were not immediately available to The Sunday Gleaner.

"The role of the EU is in this case, besides the financing, of course, monitoring of the implementation in coordination with the PIOJ. It is through this monitoring that we detected delays and a low consumption rate of the funds while we also noticed that the expected results listed above were not being achieved," said Orus Baguena in an e-mailed response to questions from The Sunday Gleaner.

He said the project implementation was started in March 2012, with an expected duration of four years (ending 2016).


increased public awareness


Expected results from the programme included increased public awareness of opportunities in the industry and potential benefits to each stakeholder group; the introduction of Jamaican businesses to successful models implemented in other parts of the world; creative financing products; building capacity in the use, management, measurement, and monitoring of ESCO contract performance, and strengthened regulatory protocols and frameworks protecting ESCOs and their customers so operations could be sustained in the long term.

Failure to achieve any of the objectives, despite expenditure of almost half the funds, forced the EU to walk away.

The EU has also taken the view that the Jamaican regulatory and policy environment were not supportive of an ESCO industry in Jamaica.

"According to our estimates, less than half of the funds have been actually spent. Therefore, the decision has been taken, in agreement with the GOJ through the PIOJ, to honour any contract that may be currently in execution but to not have any new activities tendered or contracted under this programme," said Orus Baguena.

He said the EU did not directly implement its projects and the Jamaica Productivity Centre (JPC) was responsible for implementation.

Dr Charles Douglas, head of the JPC, in response to Sunday Gleaner queries, said he took over the day-to-day running of the programme a mere four months ago after the full-time project manager demitted office.

He said several objectives were achieved under the project, including the establishment of an institutional and regulatory framework; capacity building; an ESCO benchmarking study/survey; and an awareness-building/marketing campaign and ESCO website portal.

However, he said it was hampered by "failed tenders for a number of service contracts as there was a high failure rate of the tenders due to zero response or non-compliant responses. Invited tenderers indicated that the value of the contracts were too low for the complexity of the assignment or the bidding process was too complex."

He said success was only achieved "after we decided to train interested individuals and firms how to respond to the tenders prior to their launch".


Further issues


Douglas said the programme was further affected by a "complexity of the project components, which meant that not many local or regional consultants were available to provide the required services. Seeking the services from European firms increased the costs".

He said ESCO partners "provided strong support in technical areas such as developing terms of reference for contracts and tender evaluation" but "there was room for greater cross-agency cooperation and greater speed in the approval and processing of documents such as tender dossiers and tender evaluation reports".

According to Douglas, "The EU is of the view that the project has not succeeded in creating the right regulatory, institutional, contractual and financial conditions to allow for a sustainable development of the ESCO industry in Jamaica."

He said the JPC "is committed to improving the nation's productivity and bringing together energy efficiency, renewable energy, and energy management as critical components of our drive to achieve overall productivity for Jamaica.

Jamaica was selected for the programme because the country has one of the highest energy-intensity rates in Latin America, with imported oil accounting for more than 90 per cent of total energy use.