ECONOMY-JAMAICA: Privatised Electricity Woes Unabated

By Zadie Neufville Reprint | | Print |

Zadie Neufville

KINGSTON, Sep 4 2001 (IPS) - Rolling power cuts have returned to Jamaica no sooner than its partly privatised electricity retailer announced customers would no longer face ‘load shedding’.

Unable to meet customer demand, Jamaica Public Service Company (JPSCo) since February has carried out load shedding, or rolling power cuts, during peak periods of demand. The company flew in U.S. technicians to solve its problems and said last week that full power had been restored.

Business and residential customers are back in the dark, however.

Hubert Lawrence, a JPSCo spokesperson, said the company had completed its repairs and installed a new 25-megawatt gas turbine. He laid the problem at the feet of power producer and wholesaler Jamaica Private Power Company (JPPC).

“Our only problem now is JPPC,” Lawrence said. JPSCo buys 30.5 percent of its power from independent providers.

JPPC on Aug. 28 pulled the 30 megawatts it supplied to the national grid, having previously trimmed supplies from an original 60 megawatts, saying it needed to perform “urgent repairs”.

Whoever is to blame, the affair has embarrassed JPSCo, already the target of consumer dissatisfaction, and highlights continuing troubles despite the power sector’s embrace of privatisation and deregulation as a sure means to new vitality.

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

Mirant last month dispatched a five-person team of senior personnel to solve a raft of technical problems at JPSCo. John Rachford, the team leader and chief of Caribbean and Latin American operations, said restoring broken-down power units was the company’s highest priority.

The latest setback means customers must endure power cuts of up to three hours during what normally would be the most productive times of the day. Business production is down by one-fourth in some companies, according to the Jamaica Manufacturers’ Association. The supply of water, which depends on electric pumps, also has been disrupted.

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.

When JPSCo failed to end the power cuts in mid- April, and again at the end of May, 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, noted that the company appeared hamstrung by downsizing: more than 15 per cent of its power generation and delivery personnel and some 20 percent of its 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 to stagger the redundancies over two years but many workers applied for voluntary redundancy packages at the onset.

In addition, 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 margin fell to just over 3 million dollars after it made 19.3 million dollars in redundancy payments. Planned increases in generation capacity suffered, as did maintenance, even as the company’s market grew by some 120,000 customers.

Because much of the problem stems from fires and other damage to plant, however, speculation has been rife that JPSCo has been the target of sabotage – especially following an apparent arson attack on a sub-station relay room at Belleview, on the north coast.

Lawrence dismissed the conjecture. He declined to comment on reports that the Belleview facility sustained one million dollars worth of damage, “in light of the fact that the (alleged) arsonist is to go before the courts.”

Dennis Madden, the National Democratic Movement party’s utilities spokesperson, however, said he was called a few hours before the incident and has ” heard from reliable sources that it is deliberate.”

The government’s Office of Utilities Regulation (OUR), which has hounded the power companies over their service plans, said investigating allegations of sabotage is not within its purview.

“It is the first time such an issue has come up. We will investigate only if the company gives this as an excuse for its non-performance,” said OUR spokesperson Anthony Charvis.

Meanwhile, more than 500,000 customers will continue to face electricity cuts until JPPC returns to full capacity and gives JPSCo the reserves it needs to service its own overworked power units, company officials said.

Jamaica’s electricity consumption has grown at a rate of about six per cent per year over the past five years. JPSCo spokesperson Winsome Callum said the trend was driven by the manufacturing sector.