Ross Sheil, Staff Reporter

Mirant Corporation yesterday announced it had agreed to sell its controlling stake in the Jamaica Public Service Company (JPS) and all of its Caribbean assets to Marubeni Corporation of Japan for US$1.082 billion. Finance Minister Dr. Omar Davies announced in Parliament yesterday that JPS is being sold for US$800 million, having acquired an 80 per cent stake in the power company for US$201 million in 2001.

Government owns the remaining 20 per cent which it retained upon privatising the monopoly electricity provider to the United States-based Mirant.

Mirant, which last year survived Chapter 11 bankruptcy in the U.S., has had a troubled history in Jamaica with frequent customer complaints of inflated light bills, numerous inquiries by the Office of Utilities Regulation (OUR) and last July's islandwide shutdown, which was attributed to the JPS' failure to adequately maintain the national grid. The profitability of the JPS continues to be affected by the prevalence of illegal connections in many communities while the company claimed that irregularities found on the bills of 600 businesses, cost it US$30 million (J$2 billion) in 2006.

Cabinet will decide on Monday whether to approve Marubeni, which has previously worked with the government. A statement issued yesterday by Finance Minister Omar Daviesall but announced it. "The GOJ looks forward to working with Marubeni," said Dr. Davies.

He said that he and energy minister Phillip Paulwell were satisfied with the arrangements, having met all four bidders in March.

"From the meetings we were satisfied that any one chosen would have been amply qualified to operate the JPS facility and in particular carry out the level of investment needed to meet Jamaica's future electricity needs at more competitive prices and with improved levels of efficiency," he said.

The Finance Minister has criticised the private sector's apparent lack of interest in the sale of JPS. He said yesterday that Marubeni's interest was "further demonstration of external investor confidence in the country's economic prospects".

Dr. Cezley Sampson, energy advisor to the Cabinet Office, said that Marubeni is likely to invest further in the national grid, which is hampered by high fuel costs, old generating capacity and inefficiency, with last year's system loss of 23 per cent the highest in two decades.

"Marubeni is a major Japanese company that has been involved in infrastructure and power financing globally and in Jamaica and has a very solid reputation," said Dr. Sampson. "The immediate challenge for them will be to deal with the efficiency of JPS now that the system has declined. I would expect that they would seek to improve the plant given that over 50 per cent of the plant is over 30 years old."

Meanwhile the National Workers Union, (NWU), has given government a five-day ultimatum to explain how unionised JPS workers will be affected by the sale. Amongst other issues, the NWU is concerned about the effect on current negotiations.

The price tag of US$1.082 billion, includes debt of US$350 million and power purchase obligations of approximately $153 million. Mirant is currently considering the sale of all its assets with one bid valued at US$32 billion. Having sold off its Philippines business for US$3.4 billion last year to a Marubeni-Tepco consortium, the sale of its Caribbean assets will be the end of its overseas operations.

A Mirant spokesperson said that the sale of JPS and other Caribbean assets should be completed by the end of next month.

"We have valued doing business in Curacoa, Grand Bahama, Jamaica and Trinidad," Edward R. Muller, Mirant Chairman and CEO said in a statement. "We wish the people of all four countries and Marubeni Corporation great success."

ross.sheil@gleanerjm.co

Mirant's Caribbean interests

Jamaica Public Service Company

- 80 per cent

Grand Bahama Power Company

- 55 per cent

PowerGen (Trinidad)

- 39 per cent

Curacao Utilities Company

- 25 per cent

Aqualectra (Curacao)

- US$40 million stake