ECONOMY-CARIBBEAN: Jamaica Confronts Power Shortage

By Zadie Neufville Reprint | | Print |

Zadie Neufville

KINGSTON, May 14 2001 (IPS) - Jamaica’s recently privatised electric utility says it plans to increase supply to businesses and consumers crippled by daily power outages.

Unable to meet customer demand, the Jamaica Public Service Company (JPSCo) since February has carried out ‘load shedding’, or rolling brownouts, during peak periods of demand. These are what should be the most productive times of the day, says Clarence Clarke, president of the Jamaica Manufacturers’ Association.

JPSCo Corporate Communications Officer Winsome Callum says the load-shedding operation has been the company’s only way of coping with the shortfall.

US-based Mirant Corporation, formerly Southern Energy, bought an 80 per cent stake in JPSCo from the government in March and says it hopes to add 120 megawatts to the company’s total capacity by 2004.

Meanwhile, production is down by one-fourth in some companies. The supply of water, which depends on electric pumps, also has been disrupted and thousands of students preparing for their examinations reportedly have been affected.

Seven energy producers have a combined generating capacity of 808 megawatts of electricity, enough to supply the country’s needs. But some 17 per cent of the electricity they produce – worth an estimated 34 million dollars – is lost to illegal connections and generator damage.

JPSCo is the only electricity retailer on this northern Caribbean island. The company has been unable to reach its full capacity of 510 megawatts despite buying 158 megawatts from the other producers. At peak demand, its customers use an average of 515 megawatts of electricity, 20 megawatts more than the company has been able to provide in recent months.

The government’s Office of Utilities Regulation (OUR) has ordered JPSCo to report on when and how it intends to solve the problems, largely caused by the loss of three of its major generators. In addition, JPSCo lost half of the 60 megawatts it buys from the Jamaica Private Power Company (JPPC) because of broken equipment.

JPPC says it expects to complete repairs in August – about the same time that JPSCo says it intends to put an additional 25 megawatts onto the national power grid.

Not a moment too soon, according to some of the businesses that have been hit with increasingly frequent power cuts of three hours per day.

Juliet Hall, human resource manager at Industrial Chemical, says the company’s production has fallen 20 per cent. Salary and delivery costs have increased because the company is forced to make up for lost time by operating outside its normal schedule. Often, it has had to dump batches of chemical products because power cuts took place during the mixing process.

Small businesses have been hit the hardest, says Clarke, but even those that have their own generators feel the pain. If JPSCo suffers any further reduction in its generation capacity, he warns, this would “throw the entire business community into chaos”.

A case in point is Jamaica Broilers Feeds, the country’s largest animal feed producer. Unable to provide enough electricity during power outages, production falls to 8 tonnes per hour, from the normal level of 65 tonnes. Herman Brown, a production supervisor, says the company has implemented a 24-hour waiting period for deliveries in order to meet production targets.

When JPSCo failed to end the power cuts in mid- April, and again at the end of the month, regulators called for an independent enquiry into the company’s handling of the situation.

J. Paul Morgan, OUR’s deputy director general in charge of electricity and water, says he fears the company may not have the expertise to solve its problems. More than 15 per cent of the power generation and delivery and about 20 per cent of loss reduction staff were laid off last year.

JPSCo lost 18 per cent of its 2,000 staffers in a cost-cutting restructuring exercise. The company had intended stagger the redundancies over two years but many workers applied for voluntary redundancy packages at the onset.

The company said its profits were no longer enough to keep the company viable and blamed increasing costs. Fuel prices had risen from 64 million dollars per year to about 130 million dollars, and operational expenditures rose from about 230 million dollars to 300 million dollars.

In financial 1988/99, JPSCo made more than 20 million dollars in profits and close to 17 million dollars the following year. Its marjin fell to just over 3 million dollars after it made 19.3 million dollars in redundancy payments.

JPSCo increased its generation capacity by only 1.7 per cent in 1999 and failed to repair a unit that had been out of service for over a year. Meanwhile, its market has swollen by 120,000 customers.

The electricity demands of 477,279 residential customers and more than 53,000 commercial customers leaves only 5 per cent of total power in reserve. To meet demand, JPSCo buys 30.5 per cent its power from other providers.

“With the increase in demand for electricity, they should have had enough reserves in the system to take care of what is happening now”, says Clarke.