EDITORIAL - Energy as the game-changer

The great and urgent challenge facing the Golding administration, or anyone who forms the Government, is finding an economic game-changer - something that delivers the country from its long imprisonment by low growth and constricting underdevelopment.

Repairing the fiscal imbalances and stabilising the macroeconomy, over which Jamaican governments have long been puttering, are part of the answer. But they are not enough.

Mr Golding must find something(s) that can, in relatively short order, transform the competitiveness of Jamaican producers, compared to their Caribbean and hemispheric counterparts.

The administration may be close to a critical part of that answer with its tender for 480 megawatts for power-generating capacity, if it predicates the programme on national economic self-interest rather than special-interest ideology.

In other words, any decision on new power plants must rest primarily on a fuel source whose availability is assured and will deliver energy cheaper than others. Put another way, the key determinant should be the ultimate price of energy to consumers, rather than the kind of fuel to be used.

Bid evaluation

As it now stands, the Jamaican Government's energy policy, in the short to medium term, emphasises the use of gas, via liquefied natural gas (LNG). Indeed, under the request for proposals (RFP) for the new generating capacity, compliance with the Government's fuel choice carries 15 per cent weight in the bid evaluation.

Bidding will close in March and it is expected that construction would begin in January 2012. The first 360Mw of power is to be commissioned two years later.

Two things seem incongruous with those deadlines. While a consortium led by EXMAR Corporation is the Government's preferred bidder for LNG storage, regasification, and distribution facilities, there are as yet no offtakers for gas. It is difficult, therefore, for negotiations to be concluded, or for EXMAR to agree to financing with banks.

Nor is it clear from whom Jamaica intends to source LNG, at what price, and the price below the 29 US cents per kilowatt hour energy would be delivered to consumers.

At least, that discussion has not been seriously engaged with the public. There needs to be public discussion comparing the projected cost of energy from LNG with other fuel sources, say coal, whose use as an energy source for industry continues to grow. Part of the reason for coal's popularity is that it is plentiful, and relative to other fuels, cheap.

New technologies

Of course, new technologies for the extraction of gas from shale, much of it from the deep ocean bed, will perhaps, over time, enhance the availability of LNG, especially as the cost of the technology falls.

Jamaica, however, does not have the luxury of time. Nor does it have to hold to a single energy source. Indeed, its energy policy suggests a mix of fuels, inclusive of fossils and renewables.

The prime minister's task force, recently appointed to oversee the implementation of the still poorly defined LNG project, need not be a slave to current energy timetables. It can, if that is what makes sense, adjust the policy's sequencing.

Indeed, if it so desires, the Government can indicate to the Office of Utilities Regulation its embrace of a broader range of fuels in the short to medium term, and, therefore, adjustment to the weight in the RFP for fuels.

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