CRIPPLING ENERGY COSTS: How bright is our future?

                                                                       by Kymberli Whittaker, LL.B, LEC, B.A

In October 2014, the Prime Minister of Jamaica , the Most Hon. Portia Simpson Miller, while addressing an International Monetary Fund (IMF) sponsored 2014 High-Level Caribbean Forum, said  the high cost of energy is the single most deterrent to economic growth in Jamaica and the wider Caribbean, While I would not say it is the single, most deterrent reason, I must admit that it ranks high on the list. At US$0.40 per kilowatt-hour (kWh) we are bound to a cycle of poverty as we produce less, are able to buy less and thus we want  more , but are unable to maximize on our growth and development whether on a personal or national scale.

In understanding the issue of energy, the Prime Minister states that the energy costs accounted for in excess of one-third of Jamaica’s total import bill, and more than 125 % of the country’s total merchandise exports. Businesses have been affected severely by these high costs as manufacturing in Jamaica is expensive, yet we continue this nationalistic chant of “Buy Jamaica, Grow Jamaica”. The truth of this matter is that Jamaican goods are more expensive than those produced by our  foreign competitors. So even though we wish to support Jamaica, “Land we love”, our pockets do not allow us. The domino effect of this is increased imports, and money not staying in Jamaica to further contribute on a larger scale to our growth and development.

Nestle Jamaica confirmed yesterday that they will be halting local production of the Milo Energy drink due to high energy costs. They are packing up and moving out because of the high costs. Jobs will be lost, livelihoods will be affected, and  Jamaica will lose out yet again. In the mining sector over the years we have seen the closure of 2 million tonnes of annual alumina capacity since 2009 causing us to lose the possibility of US$700 million of gross export earnings. In addition, we recently learnt that the positions of more than 200 employees of the Bernard Lodge sugar estate in St Catherine have been made redundant to cut costs among other relevant factors I believe.

The ripple effect on small business cannot be ignored as we are constantly reminded through  the Opposition political party that Entrepreneurship is the way forward, and as was said quite recently, the days of Government creating jobs are over. The high taxes and the crippling energy costs mean that the playing field is not level and the odds are already stacked against a small business or enterprise seeking to make a profit and become viable. The graduates from University thus cannot realistically look to starting a business after leaving Tertiary level institutions as it is made to seem.

Petrojam came into being in the 1970's in the midst of an oil crisis, so that we could buy oil and refine it ourselves at a cheaper rate. Esso who had owned the refinery did not want to upgrade it and as such the Government of Jamaica bought it. As a state-run entity Petrojam is a revenue earner for our Government and this is reflected in their unwillingness to pass on the savings as consumers. What is happening now is know in economics as a "Windfall" where an unexpected gain is being exploited by our Government, as Petrojam is making more money due to this continued drop in oil prices.

Concerning JPS, Have we forgotten that the Government owns 20% of the shares in the Jamaica Public Service? The Government has representatives on the Board and most importantly for every $1.00 that JPS makes in profit, the Government makes $0.20. In doing the maths and trying to understand the economy, we as a people have to take a more active role in reducing costs for ourselves.

In June of this year, the Grand Palladium Resort and Spa in Hanover invested in Solar Energy in order to attempt to save over $80 million (roughly US$730,000) in energy costs per year. The University of Technology  also unveiled the UTech/JPS Unveil 100 KW Solar Energy Project which is projected to save US$224,000 in fuel cost per annum. Solar Energy has such a great impact that the approximately $1 million monthly electricity bill at Holy Trinity High School has been reduced by approximately half. The fact the bills are even so high to begin with is incomprehensible for many, but I applaud their proactive efforts in taking charge of their energy costs.

Alternative Energy may be a partial answer to this dilemma however the Private Sector Organisation of Jamaica (PSOJ) has also raised a pertinent point “local manufacturers and consumers are not benefitting enough from the effects of the strong global reduction in oil price”. The Petroleum Corporation of Jamaica  allegedly is not passing down the price decreases but pass on the pass increases with precision. Oil prices fluctuate howver consumers are not feeling the pressure ease.

A comprehensive approach needs to be taken to address our energy issues, to look at Alternative Energy to make it more affordable for our Jamaican people, as to depend on the Jamaica Public Service which is being run by a privately owned entity whose concern is to make a profit is ludicrous. We all need to step up and know that energy affects all parts of our life, as it affects the cost of goods and services which we cannot live without. It enables increased access to services that raise our standard of living. 

Our future is in our hands, so we need to advocate for a revolutionary move as we cannot turn off the lights on our future or watch it dim until eventually it fades for good.