If everybody in the world converts natural gas and no one uses fuel oil for then what happens is the price of fuel oil would probably drop to almost nothing. It’s no different from investing in your own personal financing, you want a diversified portfolio. So you can survive through the good and the bad.
Jerome Maxwell, Managing Director of Jamalco at the Gleaner Editor’s Forum on August 14 2012AD
In a strange and shocking about-face, the GOJ (Government of Jamaica) has decided to abandon plans to use LNG (Liquid Natural Gas) as a means of lowering the cost of electricity for customers and major users of Electricity, namely the Bauxite Companies as stated in the article “Dumped! Government to throw out LNG project”, published September 23, 2012 by Arthur Hall, Senior News Editor, The Jamaica Gleaner.
Minister of Science, Technology, Energy and Mining Philip Paulwell is currently in Japan on GOJ business, most likely on negotiations with Marubeni of Japan, one of the majority shareholders in JPS Co. He’s slated to comment on this new development in Parliament next month October 2012AD. No doubt, due to the billions of taxpayers’ dollars sunk into this project thus far, both Television Jamaica and CVM TV will be carrying his announcement in Parliament on this matter of National Importance live. This as everyone in Jamaica may still be in shock by the time he returns from Japan, as was I, on reading The Sunday Gleaner dated Sunday September 23rd, 2012.
And yet Jamaica can get access to LNG from Asia via JPS Co’s Main owner, Marubeni of South Korea, but amusingly only if the GOJ admits to being too strict when it comes to deadlines for LNG Procurement Contracts as stated in the article “Will JPS save the LNG project?,” published Sunday September 9, 2012, The Jamaica Gleaner. After all is said and done, being Marubeni being five minutes late for the handing in of documents at 5 pm is really being a bit too strict.
Especially when you look at the fact that their Bid would have guaranteed a sure supply of LNG which would have been in the interests of BOTH the GOJ and JPS Co could have solve this LNG Debacle a long time ago. A JPS Co reaction thus far in sticking to the letter of the Law as it relates to argueing their rights in terms of holding on to their twenty (20) year Exclusive All-Island Electricity Distribution License may be in fact merely a reaction to this snub!
JPS Co has an interest in the LNG Plant Project going forward, despite their utterances to the contrary and selling the GOJ LNG would benefit them as it would offset the cost of the plant by allowing Marubeni of Japan and EWP (East West Power) of South Korea to make additional revenue via the supply of cheaper LNG to Jamaica and its CARICOM partners from East Asia as argued in my blog articleentitled “LNG from Trinidad and Tobago and the Energy Security of Jamaica”.
Worse news is now coming out, as it appears that this one LNG Plant’s construction and its promised supply of LNG may even not be enough to save Jamaica and may in fact do little to lower the cost of Energy as stated in the article “Smell of death hits LNG idea”, published Sunday September 9, 2012, Gary Spaulding, Senior Gleaner Writer, The Jamaica Gleaner.
Bauxite Companies such as US Rusal owned Windalco and ALCOA (Alumina Partners of America), partner with the GOJ (Government of Jamaica) to run Halse Hall based JAMALCO who are by far the largest users of Energy in Jamaica in terms of Electricity and Bunker “C” Fuel Oil have a great stake and say in the GOJ’s choice of fuel.
If the price is not sustainable over a twenty (20) year or longer period, they are not going to support its purchase for use in their Boilers as it would not be profitable long term, putting the whole issue of using LNG in the first place in a quandary once more.
Their views, which they expressed at the Gleaner Editor’s Forum on August 14 2012AD is that the GOJ needs to seek to diversify its mix of Energy instead of focusing solely on LNG as the savior stated in the article “LNG not enough says bauxite companies”, published Wednesday August 15, 2012, The Jamaica Gleaner.
The sentiments of Jerome Maxwell, Managing Director of JAMALCO that expresses the need for diversification of the Energy Mix in much the same way one diversifies their portfolio of Investments to survive the swells and doldrums of the investment market.
UC Rusal country Manager Igor Dorofeev expressed similar sentiments in support of the GOJ adopting a more diversified approach to Energy suggesting that they focus on a mix and not lean on LNG as a saviour, quote: “Who can say in 10 years’ time that gas will not be more expensive than coal and Jamaica would end up in the same situation as before. So the obvious way is to diversify, use everything”.
Top on the list were the development of the following, with my comments:
1. Biogas is a good idea, as most household and the Agricultural Sector do generate tons of Sewage and can lead to houses generating their own power
3. Coal (too expensive and environmentally polluting but stable long term in terms of Price; requires a well connected FDI)
4. CNG (Compressed Natural Gas), the Gas form of LNG
It is obvious that the GOJ is cash-strapped, as this choice of Diversification should have been the mantra of the PNP- led GOJ from the Get-go. Diversification is heavily dependent on investment in the Energy Sector by FDI (Foreign Direct Investors) coming into a Liberalized Energy Sector.
To this end, Minister of Science, Technology Energy and Mining Phillip Paulwell is working to create, whether via negotiations or Legal means by breaking JPS Co (Jamaica Public Service company’s) stranglehold on Electricity Production and Distribution via their 20 year Exclusive license.
The JPS Co has appealed the decision as stated n the article JPS appeals licence ruling, published Thursday August 30, 2012 Barbara Gayle, Justice Coordinator, The Jamaica Gleaner..Legal action by the JPS Co will drag on for another five (5) more years of reviews by the Appellate and even Privy Council or CCJ (Caribbean Court Of Justice), depending on how the future pans out for the Justice System as noted by the lack of common ground on the issue in “Deadlock on CCJ”, Published Sunday September 9, 2012, The Jamaica Gleaner.
So how to move forward with this looming deadlock from the Bauxite Companies over GOJ’s need to diversity, the unstable price and uncertainty of Supply of LNG and JPS Co unwillingness to give up its exclusive All-Island Power Distribution License?
Making one of the Private Sector Partners a direct financial beneficiary from the LNG Project via making one of the partners the supplier of LNG seems to be the answer to stable supply and prices as suggested in the article “Will JPS save the LNG project?,” published Sunday September 9, 2012, The Jamaica Gleaner.
This is the diplomatic thing to do is for the GOJ to admit to being wrong about penalizing Marubeni for its late LNG Supply Bid and allow Marubeni to resubmit their Bid to procure the LNG and also allow the Bauxite companies to also submit bids as well for LNG supply. Not only that, but in Private Sector hands, the focus would be on efficiency as opposed to the bureaucracy crazed GOJ having control and running an LNG Power Plant and supplying LNG.
But it will also affect the rest of Jamaica, not only in terms of lower Electricity prices, but in terms of lowering the cost of Motor Vehicle fuel and maintenance. Plentiful supply of cheap LNG from the Far East means that more Personal Vehicles and Vehicle Fleet owners will find it cost effective to convert their vehicles to run on LPG as noted in my Geezam blog article entitled “Auto LPG as a Motor Vehicle Fuel”.
This as the adoption of LNG, whether GOJ or Private Sector funded, is the first step towards Energy Sector Diversification and lowering our overall Electricity and Fuel Bill! Other parts of the Energy Diversification Strategy can come into play later, as the GOJ is currently unable to fully fund them all.
By this first step into LNG, Jamaica is basically on the path towards transitioning to a Hydrogen- Electron Economy as almost every household in the future would benefit from lower costs of having a single bill for Energy rather than separate bills for Electricity and Motor Vehicle Fuel.
And all the GOJ has to do is eat some Humble Pie and allow the eventual beneficiaries of LNG and the LNG Plant including Marubeni of Japan and EWP (East West Power) of South Korea, owner of JPS co and ALCOA and US Rusal to submit bid for the procurement and supply of LNG so as to avoid Jamaica’s Energy Sector falling into an Ice Age: Continental Drift (2012).
Visit and read my articles at Geezam.com, The Leading Caribbean Commentary on Technology in North America and how it will affect Jamaica: