Energy problems have surfaced again as they will with increasing frequency into the future. These are minor problems to what will occur as time moves on to 2035 or some 30 years from now. Most predictions are for oil reserves to peak in about 30 years and then begin to decline.
The viability of refineries of petroleum will diminish over that period and so, too, will industries operating on oil.
This includes plants producing electricity. Hence, ways and means of reducing operating costs or increasing revenue have to be found to prolong operational viability.
On more than one occasion recently, the last being 12 years ago, I outlined the establishment of an Integrated Energy Chemical Facility (IECF) to take advantage of:
The chlor-alkali electrolysis process using sodium chloride, brine.
The first process produces very large quantities of calcium chloride as a by-product, which is of little value. The second process is the preferred method because the by-product is chlorine, which is the basic raw material for the production of plastic.
A chlor-alkali production plant producing 400,000 tonnes of caustic and 550,000 tonnes of chlorine would be a major investment of some US$150 million.
PVC production
Chlorine can be converted to polyvinyl chloride (PVC), the basis of the plastics industry. This is a second major investment of US$350 million producing 300,000 tonnes of PVC, from 550,000 tonnes of chorine, a plant of moderate size.
PVC production can lead to a wide range of small, medium and large manufacturing enterprises in plastic goods, for local and export sales with very substantial new business opportunities and employment.
The goods manufactured cover a wide range: household appliances, packaging containers and an extensive range of consumer goods. Taken as a group, these enterprises comprise a third major investment.
Proof of viability is better stated from the reality of an identical Taiwanese investment which was established in Texas, next to an alumina plant, to produce 150,000 tonnes of caustic soda for the plant.
Actually, this Taiwanese proposal came to Jamaica first, got the run around and left. They found an interested party in Texas.
The difficulty with caustic soda production is the wide swings in pricing. This perhaps was overcome in Texas by an exclusive arrangement with the alumina producer who would then get the benefit of the low prices to average out the high.
The possibility of viability of an IECF in Jamaica is greatly enhanced by public ownership of operational plants and infrastructure.
In a sense, it is fortunate that all these facilities are vested in public ownership. These include Petrojam, the Jamaica Public Service (JPS) Hunts Bay plant, the adjoining railway line service and port facility with storage.
It is critical that none of these facilities should be divested simply for the sake of divestment. Taken together, they are key players with much larger combined potential for national development than on an individual basis. Anything less than recognising their national worth would defeat the national interest.
The Government must maintain ownership of these assets for divestment to investors prepared to develop an integrated complex to realize their full potential.
Unfortunately, since this project was first proposed, the JPS was divested. But it may yet be up for divestment again and could be acquired to re-create the full package required for the complex.
The success of all these ventures depends on competitive energy costs. Petrojam can be converted by catalytic or thermal crackling options to produce very low cost fuel which would cut current electricity rates in half providing competitive energy costs for a segment of the total generating capacity of JPS. This is a fourth massive investment.
All these projects taken together - the conversion of Petrojam US$120 million; the production of caustic soda US$150 million; the conversion to PVC US$350 million - could exceed a total package of U.S.$620 million, not counting the downstream investments in a wide range of manufactured plastic products.
This package could propel Jamaica into the 21st century successfully. It would require investment syndication with alumina producers, other foreign investors, internal private sector finance and availability of the public sector assets, to make this super-project a reality.
Actually, an Israeli group visited Jamaica at the time to negotiate investment in Petrojam to produce in Jamaica plastic products already produced in Israel.
This plant would supply their buyers in the U.S. but at less cost due to CBI duty free preferences. The investment never happened after I referred it to Government.
In frustration, they said to me, "It is a good thing we brought our swim-suits. We will take a swim and leave."
The conversion of Petrojam, creation of a new heavy industrial sector and a wide range of new plastic manufacturing enterprises, lower electricity costs, the generation of new foreign exchange earnings and creation of thousands of new jobs would be a strong jumping off point into the 21st century.
Communication link-up
The second project, which would also benefit JPS revenues, is the use of the power lines to establish a communication link-up for audio-video and data transmissions. The extensive network of JPS power lines would be ideal for this type of communication.
A Canadian group came to see me about such a project recently. I sent them on to JPS where they reported that they had a brief meeting in which some interest was shown, but no follow-up.
The problem with Jamaica is that it is stuck with a good many minds that can only think inside the box and are confined to the size of the box, where moving the country forward in leaps and bounds requires thinking outside of the box.
Edward Seaga is a former Prime Minister. He is now a Distinguished Fellow at the University of the West Indies. Email: odf@uwimona.edu.jm.
