By McPherse Thompson, Staff Reporter
A 7.4 PER cent increase in electricity
rates and a restructuring of its loan portfolio helped the Jamaica Public Service
Company (JPSCo) move from a loss to record a net profit of more than $1.1 billion
for the financial year to March, this year.
The substantial profit was made in the first year of operation under the ownership of Mirant Corporation of Atlanta, Georgia, United States, which acquired majority stake in the former state-owned entity at the end of March 2001.
JPSCo had recorded a loss before exceptional items of $703 million on sales of $17.1 billion during the 2000-2001 financial year, compared with the $1.1 billion profit from sales of $18.8 billion during the last fiscal year. The 7.4 per cent increase in billing rates in April, last year, was attributed to the 9.7 per cent increase in sales revenue during the period under review.
The substantial profit has also been credited to a restructuring of the company's loan portfolio, which resulted in a decline in its net financing costs to $726 million from $1.2 billion the year before. According to the report, US$131.4 million of medium-term debt was also arranged with Royal Merchant Bank during the financial year.
According to the island's monopoly light and power supplier, the gains were made despite challenges caused by generation problems that resulted in widespread load shedding during the period.
In a joint statement to shareholders in its annual report released at the company's annual general meeting recently, chairman James Harris, and president and chief executive officer, Charles Matthews, also attributed the gains to increased energy sales, which improved by a marginal three per cent to 2.8 million megawatts per hour.
JPSCo's operating and maintenance costs increased by just 1.8 per cent to just under $17 billion, the report said. A major component of those were employee costs, which declined by 10 per cent mainly because of a redundancy exercise undertaken during the previous year.
The company said there was also a six per cent decline in purchased power costs resulting from the extended capacity shortfall of one of the independent power producers, which it did not name.
JPSCo said its customer base grew by three per cent from 481,843 to 497,899 during the financial year. Cash and short-term deposits grew to just over $1.6 billion at the end of the financial year, compared with $353 million the previous year.
The report said the major challenge faced by the JPSCo during the year was the shortage of generating capacity. It said Mirant's acquisition of the company coincided with the loss of about 150 megawatts of capacity on a system that was already operating on a slim reserve margin. "Against this background, therefore, the major thrust of our initial efforts was to restore reliability of supply and improve the level of service to our customers," the report said.
To address the problems, the JPSCo decided to expand its generating capacity by installing a 25 megawatt gas turbine unit and a 120 megawatt combined cycle generating unit at Bogue in St. James. It also initiated a maintenance programme to ensure improvement in their units.
