Jamaicans appreciated the quick recovery in electricity supply after Hurricane Ivan's passage in September 2004. - FILE
JAMAICA'S RELATIONSHIP with the energy company that controls most of Jamaica's power source, could be likened to a love-hate relationship that has been very volatile in its short time-span. Now that Mirant has signalled that it plans to end this relationship with Jamaica, the time is now appropriate for a quick review.
The Jamaica Public Service Company (JPS), the country's sole monopoly energy generating company, has long been seen as a desirable prize. As a public-owned utility company, the chance for monopoly profits were high, but under government ownership its turbines and plants had been run-down and there was very little substantial investment made into the company during the 1990s to provide the increased energy capacity to meet current and future demand. Power cuts were frequent and the Government was hard-pressed to meet the investment needs desired. Electricity theft was also high, helped by a culture that once the utility was government-owned, then such thefts were permissible to a degree, as a trade-off for the absence to good infrastructural services.
There were several suitors for the JPS when the Government was forced to sell 80 per cent of its shares in JPS. In hindsight we should now be glad that Enron was not the first choice buyer or the problems that engulfed Enron would also have hit Jamaica hard.
PREFERRED CHOICE
Mirant was the preferred choice, and as an Atlanta-based company with a considerable level of African-American presence on its board, there was a mutual love affair at the start.
As in most relationships, the early years were the best as Mirant restored capacity, increased generating capacity and tried its best to reduce electricity theft. It even came in for praise after its quick energy restoration in the wake of Hurricane Ivan.
Where Mirant ran into problems was its over-billing of a substantial number of its customers a few years ago, plus its attempts to get Jamaicans to pay for hurricane losses in a direct way. While most persons could understand hikes in charges for exchange rate depreciation, even price adjustments for inflation and higher fuel prices, they saw no reason to pay for hurricane losses. This was not helped by news that in Jamaica, the Philippines and its other overseas energy subsidiaries, the profits being made were contributors to reversing Mirant's bankruptcy situation in the U.S.A. In no time, JPS became the most criticised utility company annually.
Now that Mirant wants to leave, like a lover that has become tired of an embittered relationship, we can better review its positives and negatives over its tenure in Jamaica. We must accept that it facilitated greater private involvement. Those who are arguing for 100 per cent government ownership of JPS must also discuss where the substantial funds must come from to maintain and expand it, amid pressing needs for government funds elsewhere.
Mirant also expanded energy capacity, and improved the quality and reliability of energy supplies, even if at high cost (especially to our manufacturers).
Among the negatives are that it has not encouraged more efficient energy use, seeming to believe that all it has to do is raise energy charges and that will be the end result. The OUR has also faced conflicting demands of trying to balance the interests of the consumers against monopoly pricing, with the interests of the investor in securing a reasonable rate of return. This has not been helped by the record rise in world oil prices, given that JPS source supplies are not diversified enough.
Mirant will still be with us for the near future as they try to extricate themselves from their Jamaica operations but, as in any failed relationship, both sides need to look at the other's viewpoint as well, and not just blame one party. That is something Jamaica should consider as we search for a suitable private sector energy supplier alternative to replace Mirant.
