Derick Latibeaudiere, governor of the Bank of Jamaica, says Jamaica's electricity sector could consume considerably less oil if its technology were upgrated. - File

Jamaica is paying a heavy price for inefficient power providers whose aging generators and equipment guzzle 40 per cent more oil than they would if their systems were using upgraded technology, according to Bank of Jamaica (BoJ) governor Derick Latibeaudiere.

Jamaica paid an estimated US$1.5 billion for oil imports in 2005.

Latibeaudiere, in a presentation to a meeting of the Latin American network of central banks and finance ministries on why Jamaica's oil bill amounted to a significant portion of gross domestic product (GDP), blamed low technologies and poor conversion rates for the problem.

"The ratio of Jamaica's oil imports to GDP is twice the average for the top 10 oil importing counties," Latibeaudiere said, adding that there was "low efficiency in the use of fuel particularly with regard to electricity generation and its transmission and distribution."

"It is estimated that based on the technology currently being used in the generation of electricity (the oil-fired steam process using bunker C fuel), Jamaica loses some 70 per cent per barrel of oil in the conversion process," said the central banker.

Other forms of technology

"My understanding is that other forms of technology could reduce these losses to around 50 per cent" - a 20 point reduction.

At that differential, Jamaica would be consuming 40 per cent more oil in electricity generation than if it were using newer technology, calculated as a ratio of the reduction to the savings (20/50 = 40 per cent).

At that estimate, Jamaica's electricity generation sector would be consuming 3.96 million barrels per year instead of the 6.59 million barrels it guzzled in 2005.

Lower efficiencies

Jamaica's fuel bill was about 15 per cent of GDP for the 27.2 billion barrels of oil consumed domestically. Electricity generation in 2005 used up 24 per cent of total according to the Petroleum Corporation of Jamaica estimate, making it the second largest oil consuming sector next to bauxite/alumina at 36 per cent or 9.8 million barrels.

This means that the lower efficiencies cost Jamaica just over US$100 million more for oil for the fiscal year ended March 31 this year.

Some 55 per cent of the oil-burning generators belonging to the largest domestic producer of electricity, the Jamaica Public Service Company (JPS) are 30 years old or older, while only 22 per cent of the oil burning generating units uses technology from the last decade - the 133 MW combined cycle generator at Bogue plant in Montego Bay built out between 2001 and 2002.

'Transmission and distribution losses are in the region of 10-12 per cent of the electricity generated relative to the world standard of seven per cent," the central bank head added in his presentation at the October 19-20 meetings.

"The scope for reducing energy consumption is in the longer term. Jamaica's scope for the development of hydro-electricity and other forms of renewable energy is limited," Latibeaudiere said.

- camilo.thame@gleanerjm.com