ESET and lessons therefrom

LAST WEEK’S inauguration of an LNG storage and regasification facility, which allows the Jamaica Public Service Company’s (JPS) power-generating plant at Bogue, St James, to be fired by natural gas, is a game-changer to the Jamaican economy. The predictably lower electricity prices will make Jamaican firms more competitive, domestically and globally.

But Bogue, and a raft of associated projects, underline what is possible when narrowly partisan politics is removed from critical areas of national life and we fashion compacts to the common good.

Until recently, upwards of 90 per cent of Jamaica’s electricity was generated by burning oil, which, mostly, is an expensive commodity, traded in a volatile market, and which this country does not produce. For nearly two decades, Jamaica debated converting to cheaper, cleaner fuels, and by and large reached a consensus on natural gas.

Yet, we couldn’t get it done. When politics didn’t intervene and special interests weren’t pursuing their own agendas, there were concerns about the integrity of the bidding process for the development and construction of new coal-fired power plants and for the delivery of LNG.

Three years ago, in the midst of the latest of these suspicion-riddled, querulous debates, the former People’s National Party (PNP) administration, at the urging of civil-society groups, set up the Electricity Sector Enterprise Team (ESET), with the mandate of establishing a demand and investment framework for the sector. Essentially, it was a workaround that reframed authority that was primarily in the hands of the Office of Utilities Regulation (OUR) and, in some respects, the appropriate minister.

ESET members include government appointees, as well as people named by the private sector and professional groups. They all had expertise relevant to the task to which they were assigned.

What is especially noteworthy about ESET is its chairmanship.

It is led by Vin Lawrence, a well-known operative in PNP administrations. But Dr Lawrence, an engineer, is a highly talented man of sharp intellect and a reputation for getting things done. It is against this backdrop, and given the importance of the work being undertaken by ESET, that when the administration changed in February, this newspaper, among others, urged Prime Minister Andrew Holness not to disrupt the team, or its leadership. To his credit, Prime Minister Holness embraced good advice.

The ESET initiative resulted not only in the Bogue conversion, but gave the green light for JPS, which generates around 60 per cent of Jamaica’s electricity, to retire some of its old, inefficient plants in favour of a new 190megawatt, gas-fired facility. Other power generators, including alumina refineries, are considering either converting existing generators to gas or installing new ones to burn the fuel.

Another potentially virtuous consequence of a settled policy, built on national consensus and sound economics, is the decision by the US investment group Fortress – contracted by JPS to deliver LNG to the Bogue plant and the new one to be built at Old Harbour, St Catherine – to attempt to further exploit opportunities in Jamaica.

They have talked about using Jamaica as a hub from which to deliver LNG to other Caribbean countries. Indeed, Fortress could invest up to US$1 billion. According to its principal, Wes Edens, the company is engaging not in a project, but in “building a business”.