pioj dialogue for development lecture - Attacking crime with capital
Published:Friday | November 29, 2013 | 12:00 AM
Medium-term growth could be spurred by concluding projects in energy and investing in security, says the president and CEO of Sagicor Life Jamaica Limited.
The planned 360MW plant and a capital investment in technology and the needs of the security forces would have a positive impact on other sectors, Byles said.
"We must try to make way in our capital budget for this investment. The payback is enormous," he asserted while delivering the 2013 PIOJ Dialogue for Development Lecture on Tuesday.
Byles itemised the cost of crime as including security expenses incurred by companies, business and investment foregone; prices discounted; health-care costs; as well as the impact on tourism.
"If Jamaica could earn an additional US$50 per room per night because it didn't have the level of crime we do have, that would mean US$275 million more per year in gross earnings. That would change the economics of the hotel business considerably," he said.
"New rooms would be constructed, foreigners would buy villas, timeshares and more linkages would be created, with positive effects for employment and foreign exchange earnings."
Violent crime has been on an upward trajectory for the last 40 years. It's been estimated that the security forces need about US$200 million (J$21b) over four years for technology, plant and equipment, said Byles.
"We need to find the room in our capital budget to fund this investment," he said, adding that long-term crime prevention would also "involve major investments in our inner cities/informal communities in the areas of housing, health, education, sanitation services and infrastructure".
As to Jamaica's energy conundrum, Byles said execution of the 360MW liquefied natural gas (LNG) plant project could alleviate a portion of the cost of electricity, which he equates to a "tax" on business.
"The project is impatient of debate," he declared.
"The latest data suggest electricity costs Jamaicans US$0.38-US$0.42 per kilowatt hour. Electricity accounts for 30 per cent of the total fuel bill of US$2.6 billion or approximately US$780 million. If we assume the saving from the new 360MW plant will be at a minimum 20 per cent, that translates to US$0.30 per kWh and removes a 'tax' on business - freeing up money for investment."
That amount of savings would reduce US-dollar consumption by more than US$156 million and increase consumer purchasing power; and, were JPS to press ahead with plans to fuel its Bogue plant with LNG, there could be further savings of US$40 million, he adds.
Neither project is expected to be finalised before 2016.
But when they are commissioned, "Both these projects should have a massive positive impact on our balance of payments," Byles said.
He noted, as well, that the responsible authorities should be planning a coal plant predicated on a revival of the bauxite sector.
"Coal can produce power at about US$0.12 per kWh. We should be making decisions on this now," he said.